Margaret 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 $21,800 in fixed costs to the $128,000 currently spent. In addition, Margaret 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 Margarets ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Prepare a CVP income statement for current operations and after Margarets changes are introduced.

BARGAIN SHOE STORE CVP Income Statement Current New select an income statement item $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select a summarizing line for the first part enter a total amount for the first part enter a total amount for the first part select an income statement item enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount (b) Compute the current break-even point in sales units, and compare it to the break-even point in sales units if Margarets ideas are implemented. (Round answers to 0 decimal places, e.g. 5,275.)

Current break-even point enter a number of pairs of shoes rounded to 0 decimal places pairs of shoes New break-even point enter a number of pairs of shoes rounded to 0 decimal places pairs of shoes (c) The parts of this question must be completed in order. This part will be available when you complete the part above.