80.2K

Verified Solution

Link Copied!

Carla Vista 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 $21,800 in fixed costs to the $128,000 currently spent. In addition, Carla Vista is proposing that a 5% price decrease ($20 to $19) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $12 per pair of shoes. Management is impressed with Carla Vista's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Compute the current break-even point in units, and compare it to the break-even point in units if Carla Vista's ideas are used. Current break-even point New break-even point pairs of shoes pairs of shoes

Carla Vista 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 $21,800 in foxed costs to the $128,000 currently spent. In addition, Carla Vista is proposing that a $% price decrease ($20 to $19) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $12 per pair of shoes. Management is impressed with Carla Vista's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Compute the current break-even point in units, and compare it to the break-even point in units if Carla Vista's ideas are used. Current break-even point New break-even point pairs of shoes pairs of shoes

Answer & Explanation Solved by verified expert

See Answer