93 94 Jana Reynolds Is the advertising manager for Payless Shoes. She is working to determine 95 how changes to her store will affect the bottom line. Currently the average sales price 96 of a pair of shoes is $60, with a variable cost of $40 per pair, and fixed costs of $200,000, 97 lana Is proposing an increase in fixed costs of $34,000 and a price decrease to $58 per 98 pair of shoes. She thinks the decrease in price will increase the sales 99 volume from 21,000 pairs of shoes to 23,000 paits of shoes. 200 201 a. Compute the current BEP: 102 Current BEP: 103 104 b. Compute the new BEP is Jana's changes are implemented: 105 New BEP: 106 107. Prepare a CVP Income Statement assuming the current sales volume of 21,000 palrs of shoes (with original 108 data) and the new sales volume of 23,000 shoes (with the new data); 109 110 Payless Shoe Store 111 CVP Income Statement 112 113 Current Proposed 114 (21,000 sales volume) (23,000 sales volume) 115 Sales 116 Variable costs 117 Contribution Margin 118 Fixed Costs 119 Net Income 120 121 d. Should the changes be made? 122 Homework 22-2 6 Hanson Company reports the following information for the month of November: Sales of $450,000 (units 5,000); varlable costs of $350,000 (units 5,000); and fixed costs of $98,000. Management is 3 considering the following Independent courses of action to increase net income. 9 Required: Compute the sales price per unit and the variable cost per unit: 2 3 42- 5 36 Compute the break even point in units and dollars: 18 Compute the new break even point in units and dollars if they increase the sales price by 10%: 20 12 Compute the new break even point in units and dollars is they decrease fixed costs by $12,000, FAMEN OBEC 35 46 17 48 495 Prepare a CVP Income statement based on number 3 assuming they sell 5,000 units: 51 52 53 Prepare a CVP Income statement based on number 3 assuming they sell 5,000 units: 46 _47 48 149 5- 150 151 152 153 154 + 155 Prepare a CVP Income Statement based on number 4 assuming they sell 5,000 units: 1566 157 158 159 160 161 162 163 7-- 164 165 166 8 167 168 169 170 Should they do number 3 or number 4? Why? Assume the original data, how many units would need to be sold to make a $10,000 profit