P22-4A Svetlana Pace 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 $34,000 in fixed costs to the $270,000 currently spent. In addition, Svetlana is proposing that a 5% price decrease ( $40 to $38 ) will produce a 20% increase in sales volume (20,000 to 24,000 ). Variable costs will remain at $22 per pair of shoes. Management is impressed with Svetlana's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

Instructions

(a) Compute the current break-even point in units, and compare it