Mary Willis is the advertising manager for Novak 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 $16,800 in fixed costs to the $133,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($20 to $19) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $12 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.

(a)Compute the current break-even point in units, and compare it to the break-even point in units if Marys ideas are used. (Round answers to 0 decimal places, e.g. 1,225.)

Current break-even point	pairs of shoes
New break-even point	pairs of shoes

Compute the margin of safety ratio for current operations and after Mary's changes are introduced.

Current Margin if safety ratio	%
New Margin of safety ratio	%