Reference no: EM133033136

Question - Sunland 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 $33,640 in fixed costs to the $313,200 currently spent. In addition, Sunland is proposing that a 5% price decrease ($40 to $38) will produce a 25% increase in sales volume (23,200 to 29,000). Variable costs will remain at $25 per pair of shoes. Management is impressed with Sunland's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Compute the current break-even point in units, and compare it to the break-even point in units if Sunland's ideas are used.