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Problem
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 $32,400 in fixed costs to the $417,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($60 to $57) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $36 per pair of shoes. Management is impressed with Mary'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 Mary's ideas are used.
(b) Compute the margin of safety ratio for current operations and after Mary's changes are introduced.
Converse corp sold 100,000 bond at 95 and incurred 3,000 of bond issuance costs. Which of the following statements is correct assuming converge reports under IFRS?
use the information in brief exercise 25.2 to compute the roi for the pennsylvania factory using total assets and
Assume that Allen Distributors offers to purchase the additional 4,900 saws at a price of $46 per unit. If Burns accepts this price
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Suppose Adessa prefers less risk and chooses to stay an employee. Show a tabulation of the income effects of rejecting the opportunity of independent practice.
Shapiro Inc. was incorporated in 2010 to operate as a computer software service firm with an accounting fiscal year ending August 31.
If the new business is expected to earn $72,000 of after-tax net income in the first year, what rate of return on beginning equity will Kelly earn under each alternative plan? Which plan will provided the higher expected return?
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