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Barbara Wilis is the advertising manager for Bargain Shoe Store She is currently working on a major promotional campaign. Her ideas include the installation of
Barbara Wilis 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 $49,200 in fixed costs to the $396,000 currently spent. In addition, Barbara is proposing that a 5% price decrease ($60 to $57) will produce a 20% increase in sales volume 20.000 to 24,000). Variable costs will remain at $36 per pair of shoes. Management is impressed with Barbara'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 Barbara's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New $ (a) Compute the current break even point in units, and compare it to the break even point in units ir Mary's ideal we used. (Hound answers to decoul places eg. 1,225.) Current break-even point pars of shoes New break-even point pars of shoes (b) Compute the margin of safety for corrent operations and after Mary's changes are introduced. (Round answers to decimal places. c. 159.) Current margin of safety ratio New margin of safety ratio
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