Please see calculations and work Thanks

Basic information
Exhibit 1 Hallstead Jewelers
Income Statements for Years Ended January 31 (thousands of dollars)
	2003	2004	2006
Sales	$9,000,000	$8,000,000	$11,000,000
Cost of goods sold	4,050,000	3,600,000	4,950,000
Gross margin	$4,950,000	$4,400,000	$6,050,000
Expenses
Selling expense
Salaries	2,021,000	2,081,000	4,085,000
Commissions	450,000	400,000	550,000
Advertising	254,000	250,000	257,000
Administrative expenses	418,000	425,000	535,000
Rent	420,000	420,000	840,000
Depreciation	84,000	84,000	142,000
Miscellaneous expenses	53,000	93,000	122,000
Total expenses	$3,700,000	$3,753,000	$6,531,000
Net income	$1,250,000	$647,000	$(481,000)
Exhibit 2 Hallstead Jewelers Operating Statistics
	2003	2004	2006
Sales space (square feet)	10,000	10,000	15,000
Sales per square foot	$900	$800	$733
Sales tickets	5,000	5,000	7,000
Average sales ticket	$1,800	$1,600	$1,571

What is the breakeven point in number of sales tickets (number of customer orders written), the breakeven in sales dollars, and the safety margin in $ and % of sales revenue for years 2003, 2004, and 2006.

How have the breakeven points and safety margin changed from 2003 to 2004, and to 2006, assuming sales revenue is $9,000,000 in 2003, $8,000,000 in 2004, and $11,000,000 in 2006? Consider the sale, variable cost and fixed cost information in your answer.

Alternative #1: One idea that the consultant had was to reduce prices to bring in more customers. If average prices in 2006 were reduced by ten percent (10%), and the number of sales tickets (unit sales) increased to 7,500, would the companys net income be increased? With prices reduced, what would be the new breakeven point in sales volume and safety margin as a % of sales in 2006?

Alternative #2: Another idea that Gretchen had was to eliminate sales commissions. Hallsteads was the only jewelry store in the city that paid sales commissions, and although both Grandfather and Father had insisted that commissions were one of the reasons for their success, Gretchen had der doubts. If sales commissions were eliminated, what would be the companys net income? How would the elimination of sales commissions in 2006 affect the breakeven volume and safety margin as a % of sales in 2006?

Alternative #3: Michaela felt that a bigger store could benefit from greater advertising and suggested that they increase advertising by $20,000, which they expect will increase sales revenue by 2%. How would this affect the companys net income, breakeven point in sales volume and safety margin as a % of sales in 2006?

How much would the average sales ticket price have to increase to breakeven in 2007, if the total fixed cost amount in 2007 remained the same as it was in 2006?

Review your work in questions 2, 3, and 4. Discuss whether each alternative is attractive and then make a recommendation based on your discussion.

Assuming the company cannot increase the average sales ticket price by the amount you determined in question 5. What do you recommend? Discuss three options, which may include adjustments to the alternatives mentioned above. Discuss how each option is viable. You may include calculations to support your answers.