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Maria Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of
Maria 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 $30,400 in fixed costs to the $272,000 currently spent. In addition, Maria is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Maria's 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 Maria's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New > $ $ >
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