User Account

All Pages

Compute the margin of safety ratio for current operations

Assignment Help Accounting Basics
Reference no: EM131920217

Question: 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:

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

• Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round to nearest full percent).

• Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary's changes are introduced.
Prepare a maximum 700-word informal memo to management addressing Mary's suggested changes.

• Explain whether Mary's changes should be adopted. Why or why not? Analyze the above information (three bullet points above) and use this information to support your suggestion.

Show your work in Microsoft® Word or Excel®.

Complete calculations/computations using Microsoft® Word or Excel®.

Reference no: EM131920217

Questions Cloud

Which the parent company assets are denominated : Assuming that the dollar is the currency in which the parent company's assets are denominated.
Explain what are some of the challenges you face : As a Manager of a hospital unit, explain what are some of the challenges you face and how you overcome them?
Current yield-capital gains yield and yield to maturity : What is the yield to maturity? what is the expected current yield? what is the expected capital gains yield?
Provide a two paragraph review on the legal implications : Read the following article below and provide a two paragraph review on the legal implications of Blockchain.
Compute the margin of safety ratio for current operations : Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round to nearest full percent).
Create a presentation to accompany the teaching plan : Describe the best approach for teaching. Create a presentation to accompany the teaching plan and present the information to your community.
Can you illustrate the components of cassandra : In your opinion, what point were the authors making in the section titled Relational Databases Lack Relationships? Explain.
What people would you work in facilitating interventions : With what people or agencies would you work in facilitating the proposed interventions and why? Explain why you chose that phase.
What is its yield to maturity and future price : What is its yield to maturity (YTM)? What will the price be 4 years from today?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Income statement and balance sheet

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows ($ thousands):

  Prepare alpha company general journal entries

se this information to prepare Alpha Company's general journal entries to record the purchase and payment for inventory purchased from is Japanese vendor

  Determine if you should buy a new truck for 20000 if you

a virtual company just hired you. your salary your reputation and your grade are all dependent on the job you do.a.

  Prepare the journal entry to record the sale of bonds

Ratzlaff Company issues $2.2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1. Prepare the journal entry to record the sale of these bonds on January 1, 2008

  What is the desired beginning inventory on june

Question - Fosnight Enterprises prepared the following sales budget: What is the desired beginning inventory on June 1

  Journalize the five entries that adjusted the accounts

Journalize the five entries that adjusted the accounts at March 31, 2010. None of the accounts were affected by more than one adjustingentry.

  Without regard to your answer in 2 above assume

wilkins manufacturing uses a job order cost accounting system. on december 1 the company has a balance in work in

  Allocate joint production costs to each product using the

bubble corporation manufactures two products i and ii from a joint process. a single production costs 4000 and results

  Prepare a balance sheet at december

Prepare a balance sheet at December 31, 2015. Include a proper heading and organize your balance sheet similar to Exhibit 2-9

  Prepare a proposed schedule of liquidation

Required: Prepare a proposed schedule of liquidation, showing how cash could be safely distributed to the partners at this time

  B corp has an employee benefit plan for compensated

b corp. has an employee benefit plan for compensated absences that gives employees 10 paid vacation days and 10 paid

  What is the inventory turnover for sampson

Assume that all balance sheet amounts represent both average and ending balance figures. What is the inventory turnover for Sampson

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd