Compute the current break-even point in units and compare

Reference no: EM13481531

Alice Shoemaker is the advertising manager for Value 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 $42,460 in fixed costs to the $273,960 currently spent. In addition, Alice is proposing that a 5% price decrease ($39 to $37) will produce a 20% increase in sales volume (21,870 to 26,244). Variable costs will remain at $19 per pair of shoes. Management is impressed with Alice'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 Alice's ideas are used. (Round answers to 0 decimal places, e.g. 2,250.)

Compute the margin of safety ratio for current operations and after Alice's changes are introduced. (Round to 0 decimal places, e.g. 22.)

Reference no: EM13481531

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