Prepare a CVP income statement for current operations and after Mary's changes are introduced AYAYAI SHOE STORE CVP Income Statement Current New Sales 400000 24000 Variable Expenses 240000 12000 Contribution Margin 160000 8000 Fixed Expenses 128000 Net Income/(Loss) 32000 Would you make the changes suggested? No Vul GTONGI 19 LUIT el. Compute the margin of safety ratio for current operations and after Mary's changes are introduced. ( Current margin of safety ratio 201% New margin of safety ratio 12 SHOW SOLUTION Compute the current break-even point in units, and compare it to the break-even point in units if Mary's ideas are used. Current break-even point T 16000 pairs of shoes New break-even point 21000 pairs of shoes Problem 11-4 (Part Level Submission) Mary Willis is the advertising manager for Ayayai Shoe Store. She is currently working on a major promotional campaign. Her ideas in the n ation of a new lighting system and increased display space that will add $19,000 in fixed costs to the $128,000 currently spent. In addition, Mary is proposing that a 5 de se ($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 Mary Ideas ut concerned about the effects that these changes will have on the break-even point and the margin of safety