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A,B&C with explanations please Donna Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign, Her ideas
A,B&C with explanations please
Donna Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign, Her ideas include the installation of a new lighting system and increased display space that will add $27,600 in fixed costs to the $272,000 currently spent. In addition, Donna is proposing that a 5% price decrease ( $40 to $38 ) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Donna's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Prepare a CVP income statement for current operations and after Donna's changes are introduced. Would you make the changes suggested? Compute the current break-even point in sales units, and compare it to the break-even point in sales units if Donna's ideas are implemented. (Round answers to O decimal places, eg. 5,275.) Current break-even point pairs of shoes Newbreak-evertsoint pairs of shoes Compute the margin of safety ratio for current operations and after Donna's changes are introduced. (Round answers to 0 decimal places, eg. 15\%) Step by Step Solution
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