Question
Mary Willis is the advertising manager forFlounderShoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new
Mary Willis is the advertising manager forFlounderShoe 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 $32,400in fixed costs to the $417,000currently spent. In addition, Mary is proposing that a 5% price decrease ($60to $57) will produce a20% increase in sales volume (20,000to24,000). Variable costs will remain at $36per 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. 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%.)
Current margin of safety ratio
%
New margin of safety ratio
%
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