Question
NCarla Vista Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation
NCarla Vista 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 $27,840 in fixed costs to the $259,200 currently spent. In addition, Carla Vista is proposing that a 5% price decrease ($40 to $38) will produce a 25% increase in sales volume (19,200 to 24,000). Variable costs will remain at $25 per pair of shoes. Management is impressed with Carla Vistas 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 Carla Vistas ideas are used. Current break-even point enter current break-even point in units pairs of shoes New break-even point enter new break-even point in units pairs of shoes Compute the margin of safety ratio for current operations and after Carla Vistas changes are introduced. (Round answers to 0 decimal places, e.g. 15%.) Current margin of safety ratio enter current margin of safety ratio in percentages % New margin of safety ratio enter new margin of safety ratio percentages Prepare a CVP income statement for current operations and after Carla Vistas changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New select an income statement item $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select a summarizing line for the first part enter a total amount for the first part enter a total amount for the first part select an income statement item enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount Would you make the changes suggested? select an option
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