Jana Reynolds is the advertising manager for Payless Shoes. She is working to determine

how changes to her store will affect the bottom line. Currently the average sales price

of a pair of shoes is $$62,$ with a variable cost of $$44$ per pair, and fixed costs $$203,400.$

Jana is proposing an increase in fixed costs of $$9,000$ and a price decrease to $$59$ per

pair of shoes. She thinks the decrease in price will increase the sales

volume from $21,500$ pairs of shoes to $23,500$ pairs of shoes.

a$.$ Compute the current BEP:

Current BEP:

b$.$ Compute the new BEP is Jana's changes are implemented:

New BEP:

c$.$ Prepare a CVP Income Statement assuming the current sales volume of $21,500$ pairs of shoes $($with original

data$)$ and the new sales volume of $23,500$ shoes $($with the new data$)$:

Payless Shoe Store

CVP Income Statement

Current

Proposed

sales volume$)$ sales volume