Alma Ortiz is the advertising manager for Cost Less Shoe Store. She is currently work

$-$

ing on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $

$18$

$,$

$000$

$$in fixed costs to the $

$216$

$,$

$000$

$$cur

$-$

rently spent. In addition, Alma is proposing that a

$10$

$\%$

$$price decrease

$($

from $

$30$

$$to $

$27)$

$$will produce an increase in sales volume from

$20$

$,$

$000$

$$to

$24$

$,$

$000$

$$units$.$ Variable costs will remain at $

$12$

$$per pair of shoes. Management is impressed with Alma

$$

s ideas but concerned about the effects that these changes will have on the break

$-$

even point and the margin of safety

$\mathrm{.}25$

$$Cost Volume ProfitInstructions

$($

a

$)$

Compute the current break

$-$

even point in units, and compare it to the break

$-$

even pointin units if Alma

$$

s ideas are used.

$($

b

$)$

Compute the margin of safety ratio for current operations and after Alma

$$

s changesare introduced.

$($

Round to nearest full percent.

$)($

c

$)$

Prepare a CVP income statement for current operations and after Alma

$$

s changes areintroduced.

$($

Show column for total amounts only.

$)$

$$ Would you make the changessuggested?