Introduction:
Foxy Originals is a Canadian jewelry company; founded by owners Jennifer Ger and Suzie Chemel in 1998. Their goal was to create high quality and unique jewelry pieces that targeted women between the ages of 20 to 45 at an affordable price point. The company has been successful in the Canadian and United States market but both Jennifer Ger and Suzie Chemel want to re-evaluate Foxy Original’s existing sales strategy.
Problem:
From my analysis of Foxy Originals, I will be exploring the decision regarding whether Jennifer Ger and Suzie Chemel should continue attending trade shows or focus on expanding their current online market strategy. Both Jennifer Ger and Suzie Chemel’s overall goal is to increase Foxy Originals overall profit by at least $100,000. By applying the Cost – volume – profit analysis, I will examine the changes in profit in response to the changes of selling at low or high sales volume. The analysis will provide us information about Foxy Originals breakeven point which is when all fixed and variable cost are covered; resulting in zero profit. We will also compare contribution margins statements, margin of safety and degree of operating leverage of each decision. Further, we will be exploring issues and providing recommendations on the number of sales needed to achieve a target profit of $100,000. …show more content…
After enough units are sold to cover fixed costs of $93,000.00, the contribution margin per unit from remaining sales becomes profit. I decided to compare contribution margins per unit and per order for both necklaces and earring being sold at the trade show and online. Difference in selling price resulting in different contribution margin per unit (Exhibit4). After the contribution margin analysis, it helps to determine the sales goals for the overall business
Foxy Originals is a Canadian jewelry company; founded by owners Jennifer Ger and Suzie Chemel in 1998. Their goal was to create high quality and unique jewelry pieces that targeted women between the ages of 20 to 45 at an affordable price point. The company has been successful in the Canadian and United States market but both Jennifer Ger and Suzie Chemel want to re-evaluate Foxy Original’s existing sales strategy.
Problem:
From my analysis of Foxy Originals, I will be exploring the decision regarding whether Jennifer Ger and Suzie Chemel should continue attending trade shows or focus on expanding their current online market strategy. Both Jennifer Ger and Suzie Chemel’s overall goal is to increase Foxy Originals overall profit by at least $100,000. By applying the Cost – volume – profit analysis, I will examine the changes in profit in response to the changes of selling at low or high sales volume. The analysis will provide us information about Foxy Originals breakeven point which is when all fixed and variable cost are covered; resulting in zero profit. We will also compare contribution margins statements, margin of safety and degree of operating leverage of each decision. Further, we will be exploring issues and providing recommendations on the number of sales needed to achieve a target profit of $100,000. …show more content…
After enough units are sold to cover fixed costs of $93,000.00, the contribution margin per unit from remaining sales becomes profit. I decided to compare contribution margins per unit and per order for both necklaces and earring being sold at the trade show and online. Difference in selling price resulting in different contribution margin per unit (Exhibit4). After the contribution margin analysis, it helps to determine the sales goals for the overall business