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The Sales manager for clothes store is currently working on a campaign. She wants to install a new lighting system and increased display space that will add $14,250 in fixed costs to the $173,850 currently spent. In addition, she is proposing that a 10% price decrease ($25 to $22.50) will produce a 20% increase in sales volume (19,000 to 22,800). Variable costs will remain at $10 per pair of shoes. Management are impressed with her ideas but are concerned about the effects that these changes will have on the break-even point and the margin of safety.
A) Whats the current break even point?
B) Break even point if her ideas are used?
C) Current margin of safety ratio %
D) Margin of safety ratio if her changes are introduced %
E) I need to do an income statement for current operations and after manager's changes are introduced. How do I do this?
I worked A and B and got 11,590 units and 15,048 respectively.
So I just need help with C, D and E. I'm having a hard time identifying the actual sales number because for some reason my MOS are negative and i know that is wrong. Can you please help me?
A) Whats the current break even point?
B) Break even point if her ideas are used?
C) Current margin of safety ratio %
D) Margin of safety ratio if her changes are introduced %
E) I need to do an income statement for current operations and after manager's changes are introduced. How do I do this?
I worked A and B and got 11,590 units and 15,048 respectively.
So I just need help with C, D and E. I'm having a hard time identifying the actual sales number because for some reason my MOS are negative and i know that is wrong. Can you please help me?
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