SunlandWillis is the advertising manager for Bargain Shoe Store. She is currently working on a...
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SunlandWillis 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 $33,640in fixed costs to the $313,200currently spent. In addition,Sunlandis proposing that a 5% price decrease ($40to $38) will produce a25% increase in sales volume (23,200to29,000). Variable costs will remain at $25per pair of shoes. Management is impressed withSunland'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 ifSunland's ideas are used.
Current break-even point ____________ enter current break-even point in units
pairs of shoes ______________New break-even point enter new break-even point in units
pairs of shoes
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