Question $4$ of $4$

$-14\mathrm{.}5$

Sandra Robinson is the advertising manager for Oriole 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 $$19,800$ in fixed costs to the $$237,600$ currently spent. In addition, Sandra is proposing that a $10\%$ price decrease $($ $$27$ to $$24)$ will produce a $20\%$ increase in sales volume $(22,000$ to $26,400).$ Variable costs will remain at $$12$ per pair of shoes. Management is impressed with Sandra'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 Sandra's ideas are used.

Current break$-$even point units

Break$-$even point if Sandra's ideas are used units

eTextbook and Media

Question Part Score

$\frac{-}{1}$

Calculate the margin of safety ratio for current operations and after Sandra's changes are introduced. $($Round final answersto $2$ decimal places, e$.$g$.15\mathrm{.}25\%)$

Current margin of safety ratio

$\%$

Margin of safety ratio Sandra's changes are introduced

$\%$

Question $4$ of $4$

$-14\mathrm{.}5$

Question Part Score

$--10\mathrm{.}5$

Prepare CVP income statements forcurrent operations and after Sandra's changes are introduced, for the year ended December $31,2022.$

Current

New

$

$

$q,$

$q,$

$q,$

$

$q,$

$

$q,$

$q,$ Would you make the changes suggested?

The changes $$ be made.