Question

i need only part a

Scenario:

Dazzle Jewelry Company is a new startup merchandising company with the goal of offering fine jewelry at reasonable prices. This goal has been made possible by securing manufactures that have agreed to offer wholesale prices to Dazzle Jewelry Company. Dazzle's jewelry supplier's act in good faith is based on the hopes that this will be a long term relationship, and Dazzle's orders will increase considerably with the next 18 months. However, in order for Dazzle Jewelry Company to achieve this it must increase its sales. Dazzle Jewelry company just completed its first month of operations, the brother/sister owned startup inventory includes fresh water pearls, sterling silver, stainless steel watches and quality stone pieces. Each of the inventory category includes earrings, necklaces, rings and bracelets, except the stainless steel watches. The average cost of earrings per unit is $10 with an average selling price of $55, 20 units have been sold. The average cost of the necklace is $15 with a selling price of $65, 25 units have been sold. The bracelets have an average cost of $12 and a selling price of $45, 15 units have been sold. The rings on an average sell for $35, but cost $11 per unit, 30 units have been sold. The stainless steel watches average cost per unit is $35 with a selling price average of $85, and 50 units have been sold.

Dazzle Jewelry Company plans to start their business online before setting up a physical store location to keep their overhead cost low. However, since this is Dazzle Jewelry's first year of operations the owners have decided to employed your firm to help them determine how many jewelry units they need to sell in the current operating year to reach their targeted profit of $300,000. The owners realize that this information is vital in helping them develop their sales and marketing strategy.

Dazzle Jewelry Company owners noted in a follow-up e-mail that fixed cost for the year totaled $76,320, however this cost is likely to increase in the coming months by 20% based on a marketing proposal that was submitted by Bosch Advertising. The owners also noted in the e-mail that fixed cost is the same amount each month.

a)

Based on your analysis, how many units will Dazzle Jewelry need to reach their target profit? What recommendation do you have for the owners related to reaching their target profit of $300,000?

Answer 1

Calculation showing the jewellery pieces to be sold in order to earn 300000$ in the current operating year.

Contribution required = Fixed cost + profit required

= 76320+ 300000= 376320$

Particulars	contribution p.u	units sold	total	weight in total contribution
Earrings	45	20	900$	0.153
Necklace	50	25	1250	0.213
Bracelets	33	15	495$	0.0843
Rings	24	30	720$	0.1227
Watch	50	50	2500	0.426

Total contribution. = 5865$

Average contribution p.u. = 5865/140= 41.89$

So to reach the required contribution the total units to be sold are= 376320/41.89= 8983.53 units.