Harvard Business Case Study 3

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1.
| 2003| 2004| 2006|
Breakeven Sales| $8,005,000| $7,890,000| $11,117,000|
Breakeven Sales Ticket | 4,981| 5,177| 7,158|
Margin of Safety| $578,000| $212,000| -$406,000|

The breakeven point in the number of ticket sales from 2003 to 2004 increased by 196 tickets. The breakeven point in the number of ticket sales from 2003 to 2006 increased by 2,177 tickets The breakeven point in the number of ticket sales from 2004 to 2006 increased by 1,981 tickets

The breakeven sales decreased by $115,000 from 2003 to 2004. The breakeven sales increased $3,112,000 from 2003 to 2006. The breakeven sales increased $3,227,000 from 2004 to 2006.

The margin of safety decreased $366,000 from 2003 to 2004.
The margin of safety decreased $984,000 from 2003 to 2004.
The margin of safety decreased $618,000 from 2004 to 2006.

The drastic change from 2003, 2004 to 2006 is due mainly to moving into the new store location, which increased the rent, increased depreciation, increased salaries (due to additional sales people). The new costs for the new location outweighed the additional income that was gained by moving locations. The average ticket sales decreased because of the extra cost and the store was unable to increase the average ticket sales to pay off the costs. They would have to increase their ticket sales average by $59 to breakeven or increase sales of tickets by an additional 262 tickets.

2.
| 2006|
New Avg Sales Price| $1,397.70 ($1,553x10% = 155.3) ($1,553-$155.3)| Sales Tickets| 7500|
New Sales| $10,482,750|

The company’s sales would decrease from $10,711,000 to $10,482,750

| 2006|
Breakeven Sales| $11,117,000|
Breakeven Sales Ticket | 7,954|
Margin of Sales| -$634,250|

The breakeven point in sales will remain $11,117,000. The breakeven point in ticket sales would increase from 7,158 to 7,954, requiring the company to sell an additional 796 sales tickets.

3.
| 2003| 2004| 2006|...
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