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Problem 22-05A a-c (Video) Crane Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas
Problem 22-05A a-c (Video) Crane 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 $16,800 in fixed costs to the $133,000 currently spent. In addition, Crane 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 Crane'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 if Crane's ideas are used. Current break-even point pairs of shoes New break-even point pairs of shoes Compute the margin of safety ratio for current operations and after Crane's changes are introduced. (Round answers to o decimal places, e.g. 15%.) Current margin of safety ratio New margin of safety ratio Prepare a CVP income statement for current operations and after Crane's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New Would you make the changes suggested
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