Print by: Erica Burkett AC202:AC202DLU1A2020 Principles of Managerial Account in / AC202 - Chapter 18 Assignment *Problem 18-4A Mary 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 $27,600 in fixed costs to the $272.000 currently spent. In addition, Mary is proposing that a 5% price decrease (540 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per 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 current break-even point in units, and compare it to the break-even point in units ir Mary's ideas are used. (Round answers to o decimal places, e.g. 1,225.) Current break-even point 17 ou Dals of shoes | New break-even point Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round answers to o decimal places, e.g. 159.) 21400 pairs of shoes pose als 6 Current margin of safety ratio % 15 11 - 70, Prepare a CVP income statement for current operations and after Mary's changes are introduced. 700,- (20,000 X 40)-(17,000 X 40) 2opon x40 New margin of safety ratio 96 Current New 40x = 24x + 272,000 16x 272,00 $ 800,00 $ 912.00 576,000 SAles Variable Expense Contribution Margin 320,00 Exted Expense 210 DOO Net income $ 500 DO 336,00 1, 244000 L 48.00 Would you make the changes suggested? 33X = 34x + (272,00 +27.00) 14 x 29460 ND (21,400 C.000-250 by John Wie Sons, inc.created org Question Attempts: 0 of 3 used 156, ou 272,000 / (640838) = 2724000/2 Low x 38) - (21,400 x 38) 912, ow (24,00* 912,000 813,200 You ell