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Scenario: 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.
Complete the following:
Prepare a maximum 700-word informal memo to management addressing Mary's suggested changes.
Show your work in Microsoft Word or Excel.
Complete calculations/computations using Microsoft Word or Excel.
Format your assignment consistent with APA guidelines.
Compute the percentage growth in net sales for each product line from fiscal year 2008 to 2009. Round percents to one decimal.
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