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Carol Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of
Carol 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 $24,600 in fixed costs to the $128,000 currently spent. In addition, Carol is proposing that a 5% price decrease ($20 to $19 ) will produce a 20% increase in sales volume (20,000 to 24,000 ). Variable costs will remain at $12 per pair of shoes. Management is impressed with Carol'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 Carol's changes are introduced
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