Margaret Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major pro ideas include the installation of a new lighting system and increased display space that will add $21,800 in fixed costs to the S 128.000 currently spent. In addition, Margaret is proposing that a 5% price decrease ($ 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 Margaret's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Prepare a CVP income statement for current operations and after Margaret's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New
Margaret Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major pro ideas include the installation of a new lighting system and increased display space that will add $21,800 in fixed costs to the S 128.000 currently spent. In addition, Margaret is proposing that a 5% price decrease ($ 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 Margaret's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Prepare a CVP income statement for current operations and after Margaret's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Margaret 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 $21,800 in fixed costs to the S
128,000 currently spent. In addition, Margaret is proposing that a 5% price decrease ($ 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 Margaret's ideas
but concerned about the effects that these changes will have on the break-even point and the margin of safety.
(a)
Prepare a CVP income statement for current operations and after Margaret's changes are introduced.
BARGAIN SHOE STORE
CVP Income Statement
Sales
Variable Expenses
Contribution Margin
Fixed Expenses
Net Income/(Loss)
Current
New
100
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