Salem State University Managerial Accounting Cost Volume Profit Course Assignment The advertising manager for Bertolon Inc, a manufacturer of women's' shoes, is currently working on a major promotional campaign. Her ideus include the installation of a new lighting system and increased display space that will add $34,000 in fixed costs to the $270,000 currently spent by the company. In an effort to increase sales volume the advertising manager is also proposing a 5% price decrease from the current selling price of $40 per pair of shoes. The company is currently selling 20,000 pairs of shoes and expects that these changes would bring a 20% increase in the number of shoes sold. The current variable costs for a pair of shoes are $22 and management expects this figure to remain unchanged. Management is impressed with the advertising manager's initiative and ideas but is concerned about the effects these changes will have on company profits, break-even point and margin of safety. Requircments 1. Using Microsott Exoel prepare a contribution margin income statement based on the company's curreat eperations. Tbe income statement sheuld be properly formatted and inclade sales, varisble costs and contribution margin in tocal and also on a per unit basis. Right below the incoene statement calculate the following based on the current operations: - Break even in units sold - Break even in dollars + Margin of safety in enits - Margin of safety in dollars 1. Using Microsoft Excel prepare a contribution margin issume statement based the advertising inanagers recommendasions. The income statement should be ptoperly formaned and include sales, variable cosis and contribution margin in total and alse on a per unit basis. Right below the income statetnent calculate the following based on the current operations: - Break even is units sold - Break even in dollars - Margin of safety in units - Margin of safety in dollars 3. Using Microsott Word, peepare a one-page memo in which you explain whether of not these changes should be made. Please be very careful when you prepare this mema. Your grade will be based on the following: win Does the memo include a clear recommendation, properly supported by your analysis? wD Does the memo exhibit a clear and coherent overall structure? s). Does the memo employ cortect grammat, sentenec and parragraph structure? 4 Are there punctuation and spelling crrors? The heading of the memo should be as follows: - Break even in dollars - Margin of safety in units - Margin of safety in dollars 2. Using Microsoft Excel prepare a contribation margin incume statement based the advertising managers recommendations. The income statement should be properly formatted and include sales, variable costs and contribution maryin in total and also on a per unit bases. Right below the income statement calculate the following based on the current operations: + Break even in units sold + Break even in dotlars - Margin of safety in units - Margin of safety in dollars 2. Using Microwet Ward, prepare a one-page memo in which you explain whether of not these changes should be made. Piease be very careful when you prepare this memo. Your grade will be based on the following: * Does the memo include a clear recommendution, properly supported by your analysis? Does the memo exhibit a clear and coherent overall structure? vo Does the memo employ correct grummar, sentence and paragraph structure? a. Are there punctuation and spelling crrots? The heading of the memo should be as follows: MEMORANDUM TO: Put the name of your ptofessot here FROM: Put your name here DATE: Put the date the memo is writted RE: Include a one-line description of the memo tepic
