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 $32,400 in fixed costs to the $417,000 currently spent. In addition, Sunland is proposing that a 5% price decrease ($60 to $57) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $36 per pair of shoes. Management is impressed with Sunlands ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

(a) Correct answer icon Your answer is correct. Compute the current break-even point in units, and compare it to the break-even point in units if Sunlands ideas are used.

Current break-even point 17375 pairs of shoes

New break-even point 21400 pairs of shoes

(b) New attempt is in progress. Some of the new entries may impact the last attempt grading. Your answer is incorrect. Compute the margin of safety ratio for current operations and after Sunlands changes are introduced. (Round answers to 0 decimal places, e.g. 15%.)

Current margin of safety ratio %

New margin of safety ratio %

I need letter B answered.