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Sunland Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of
Sunland 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 $27,260 in fixed costs to the $253,800 currently spent. In addition, Sunland is proposing that a 5% price decrease ($40 to $38) will produce a 25% increase in sales volume (18,800 to 23,500). Variable costs will remain at $25 per pair of shoes. Management is impressed with Sunland's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Compute the current break-even point in units, and compare it to the break-even point in units if Sunland's ideas are used. Current break-even point New break-even point eTextbook and Media Save for Later pairs of shoes pairs of shoes Attempts: 0 of 5 used Submit Answer (b) Compute the margin of safety ratio for current operations and after Sunland's changes are introduced. (Round answers to O decimal places, e.g. 15%.) Current margin of safety ratio New margin of safety ratio eTextbook and Media Prepare a CVP income statement for current operations and after Sunland's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current > > > > > +A New $ $ Would you make the changes suggested
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