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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 of
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 exist24, 190 in fixed costs to the exist275, 270 currently spent. In addition, Mary is proposing that a 5% price decrease exist41 to exist39) will produce a 18% increase in sales volume 21, 270 to 25, 099 Variable costs will remain at exist25 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) 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 0 decimal places, e.g. 1, 225.) (b) Compute the margin of safety ratio for current operations and after Mary's changes are introduced. (Round answers to 0 decimal places, e. g. 15%.) (c) Prepare a CVP income statement for current operations and after Mary's changes are introduced. Would you make the changes suggested
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