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Mary Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation
Mary 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 $29,000 in fixed costs to the $270,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($40 to $38) will produce a 25% increase in sales volume (20,000 to 25,000). Variable costs will remain at $25 per pair of shoes. Management is impressed with Mary's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Your Answer Correct Answer Your answer is correct. Compute the current break-even point in units, and compare it to the break-even point in units if Mary's ideas are used. Current break-even point New break-even point eTextbook and Media Solution 18000 pairs of shoes 23,000 pairs of shoes
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