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Cullumber Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of
Cullumber 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 $54,600 in fixed costs to the $399,000 currently spent. In addition, Cullumber 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 Cullumber'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 Cullumber's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New Sales $ $ Variable Expenses Contribution Margin Fixed Expenses Net Income/(Loss) $ Would you make the changes suggested? No v Click if you would like to Show Work for this question: Open Show Work
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