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Category > Accounting Posted 21 Apr 2017 My Price 7.00

major promotional campaign.

Mary 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 $24,000 in fixed costs to the $270,000 in fixed costs currently spent. In addition, Mary is proposing a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary's ideas but concerned about the effects these changes will have on the break-even point and the margin of safety.

How to compute the current break-even point in unit?

How to compare it to the break-even point in units if Mary's ideas are used?

How to compute the margin of safety ratio for current operations and after Mary's changes are introduced?

How to prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary's changes are introduced?

Answers

SuperTutor
(15)
Status NEW Posted 21 Apr 2017 02:04 AM My Price 7.00

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