PRINTER VERSION 1 BACK NEX Problem 6.45A a-c Alice Oritz is the advertising manager for Value 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 $30,870 in fixed costs to the $264,600 currently spent, In addition, Alice is proposing that a 10% price decrease ($35 to $31.50) will produce a 20% Increase in sales volume (21,000 to 25,200). Variable costs will remain at $14 per pair of shoes. Management are Impressed with Alice's Ideas but are concerned about the effects that these changes will have on the break-even point and the margin of safety. Calculate the current break-even point in units, and compare it with the break-even point in units if Alice's ideas are used. Current break-even point units Break-even point if Alice's ideas are used units Calculate the margin of safety ratio for current operations and after Alice's changes are Introduced. Current margin of safety ratio % Margin of safety ratio Alice's changes are introduced Prepare CVP income statements for current operations and after Alice's changes are introduced. VALUE SHOE STORE CVP Income Statement