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

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Karens Quilts is considering the purchase of a new Long-arm Quilt Machine that will cost $17,500 and...

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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 $19,000 in fixed costs to the $128,000 currently spent. In addition, Mary 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 Mary’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.
Patricia Johnson is the advertising manager for Crane 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 $14,760 in fixed costs to the $177,120 currently spent. In addition, Patricia is proposing that a 10 % price decrease ($30 to $27) will produce a 20% increase in sales volume (16,400 to 19,680). Variable costs will remain at $12 per pair of shoes. Management is impressed with Patricia's ideas but are concerned about the effects that these changes will have on the break-even point and the margin of safety. Calculate the current break-even point in units, and compare it with the break-even point in units if Patricia's ideas are used. Current break-even point Break-even point if Patricia's ideas are used units units
Nancy 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 $10,000 in fixed costs to the $144,000 currently spent. In addition, Nancy 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 Nancy'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 Nancy's changes are introduced. Sales BARGAIN SHOE STORE CVP Income Statement Current $ New
Richie Chandra is the advertising manager for Skechers brand. 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 $24,000 in fixed costs to the $270,000 currently spent. In addition, Richie is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Richie’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Instructions a) Compute the current break-even point in units, and compare it to the break-even point in units if Richie’s ideas are used. b) Compute the margin of safety ratio for current operation and after Richie’s changes is introduced. c) Prepare a CVP income statement for current operations and after Richie’s changes are introduced. d) Would you make the changes…
Sandra 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 $39,000 in fixed costs to the $423,000 currently spent. In addition, Sandra 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 $36 per pair of shoes. Management is impressed with Sandra's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. (a) Prepare a CVP income statement for current operations and after Sandra's changes are introduced. BARGAIN SHOE STORE CVP Income Statement Current New 2$ $ $ Would you make the changes suggested?
Jayzene Griffiths is the newly appointed manager for a fashionable shoe store. Her marketing ideas include the installation of a new lighting system and increased display space that will add $30,000 in fixed costs to the $18,000 currently being spent. In addition, Jayzene is proposing that a 10% decrease ($30.00 to $27.00) will produce a 30% increase in sales volume (5,000 to 6,500). Variable costs will remain at $15 per pair of shoes. Management is impressed with Jayzene’s ideas, but concerned about the effects these changes will have on the breakeven point and margin of safety. Required: Compute the current breakeven point in units and dollar value and compare it to the breakeven point (units and $) if Jayzene’s ideas are used. Prepare two (2) conventional breakeven charts (using excel spread sheets) for the current and proposed situations. The chart must indicate the BEP and margin of safety.
Jayzene Griffiths is the newly appointed manager for a fashionable shoe store. Her marketing ideas include the installation of a new lighting system and increased display space that will add $30,000 in fixed costs to the $18,000 currently being spent. In addition, Jayzene is proposing that a 10% decrease ($30.00 to $27.00) will produce a 30% increase in sales volume (5,000 to 6,500). Variable costs will remain at $15 per pair of shoes. Management is impressed with Jayzene’s ideas, but concerned about the effects these changes will have on the breakeven point and margin of safety. Required: Compute the margin of safety ratio for both situations. Prepare CVP income statements for both the current and proposed situations. Would you make changes suggested by Jayzene? Give reasons for your answer.