Ivanhoe 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 $57,600 in fixed costs to the $387,600 currently spent. In addition, Ivanhoe 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 Ivanhoes 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 Ivanhoes changes are introduced.

Would you make the changes suggested?