Solution-Compute the current break-even point in units

Compute the current break-even point in units

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Reference no: EM132778034

Question - Crane 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 $51,000 in fixed costs to the $411,000 currently spent. In addition, Crane 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 Crane's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

Compute the current break-even point in units, and compare it to the break-even point in units if Crane's ideas are used.

Compute the margin of safety ratio for current operations and after Crane's changes are introduced.

Prepare a CVP income statement for current operations and after Crane's changes are introduced.

Would you make the changes suggested?

Reference no: EM132778034

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Compute the current break-even point in units

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Reference no: EM132778034

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