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What are the steps to compute the margin of safety ratio

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Reference no: EM132540045

Question 1: What are the steps to Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round to nearest full percent)?

Based on the following scenario:

  • 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.

Reference no: EM132540045

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