Mary Willis is the advertising manager for Ayayai 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 $22,000 in fixed costs to the $286,000 currently spent. In addition, Mary 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 Marys ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

Compute the current break-even point in units, and compare it to the break-even point in units if Mary's ideas are used. (Round answers to O decimal places, e.g. 1,225.) Current break-even point 17,875 pairs of shoes 22,000 pairs of shoes New break-even point T U Compute the margin of safety ratio for current operations and after Mary's changes are introduced. (Round answers to O decimal places, e.g. 15%.) Current margin of safety ratio New margin of safety ratio