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Mary Willis is the advertising manager for Bridgeport Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of
Mary Willis is the advertising manager for Bridgeport 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 $33,600 in fixed costs to the $420,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($60 to $57) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $36 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. BRIDGEPORT SHOE STORE CVP Income Statement Current New X Sales X Variable Expenses Contribution Margin X X Fixed Expenses Net Income/(Loss) X Would you make the changes suggested
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