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Sandhill Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of
Sandhill 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 $16,600 in fixed costs to the $136,000 currently spent. In addition, Sandhill 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 Sandhill'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 Sandhill's ideas are used. Current break-even point pairs of shoes New break-even point pairs of shoes e Textbook and Media Compute the margin of safety ratio for current operations and after Sandhill's changes are introduced. (Round answers to 0 decimal places, eg. 15%. Current margin of safety ratio New margin of safety ratio eTextbook and Media Prepare a CVP income statement for current operations and after Sandhill's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New Would you make the changes suggested? e Textbook and Media
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