Mary Willis is the advertising manager for Culver Shoe Store.She is currently working on a major promotional campaign. Her ideasinclude the installation of a new lighting system and increaseddisplay space that will add $14,000 in fixed costs to the $133,000currently spent. In addition, Mary is proposing that a 5% pricedecrease ($20 to $19) will produce a 20% increase in sales volume(20,000 to 24,000). Variable costs will remain at $12 per pair ofshoes. Management is impressed with Mary’s ideas but concernedabout the effects that these changes will have on the break-evenpoint and the margin of safety.
A)
Current break-even point_____________ pairs of shoes
New break-even point________________pairs of shoes
B)
Current Margin of safety ratio _________%
New margin of safety ratio _________%
C)
Prepare a cup income statement for current operations and afterMary's changes are introduced.
Income statement :
