Problem 11-4 (Part Level Submission) Mary Willis is the advertising manager for Sheffield 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 $24,600 in fixed costs to the $128,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($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's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Your answer is correct. Compute the current break-even point in units, and compare it to the break-even point in units if Mary's ideas are used. (Round answers to 0 decimal places, e.g. 1,225.) Current break-even point 16,000 pairs of shoes New break-even point 21,800 pairs of shoes SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT Attempts: 1 of 3 used (b) Your answer is correct. Compute the margin of safety ratio for current operations and after Mary's changes are introduced. (Round answers to 0 decimal places, e.g. 15%.) Current margin of safety ratio 20% New margin of safety ratio 10% SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT Attempts: 3 of 3 used Your answer is partially correct. Try again. Prepare a CVP income statement for current operations and after Mary's changes are introduced. SHEFFIELD SHOE STORE CVP Income Statement Current New Sales 400,000 456,000 Variable Expenses 480,000 576,000 Contribution Margin 80,000 -120,000 Fixed Expenses 128,000 147,000 Net Income/(Loss) -48,000 -267,00 Would you make the changes suggested? No