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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
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. Would you make the changes suggested? The changes be made. Prepare CVP income statements for current operations and after Sandra's changes are introduced, for the year ended December 31,2022. Would you make the changes suggested
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