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 Alice Ohta is the advertising manager for Value Shoe Store

Accounting

 Alice Ohta 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 $30,870 in fixed costs to the $264,600 currently spent. In addition, Alice is proposing that a 10% priCe decrease ($35 to $31.50) will produce a 20% Increase In sales volume (21,000 to 25,200). Variable costs will remain at $14 per pair of shoes. Management are Impressed with Alice'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 Alice's ideas are used. Current break-even point units Break-even point If Alice's ideas are used units 
Calculate the margin of safety ratio for current operations and after Alice's changes are Introduced. 
Current margin of safety ratio 
Margin of safety ratio Alice's changes are Introduced 
Prepare CVP income statements for current operations and after Alice's changes are introduced. 
VALUE SHOE STORE CVP Income Statement 
 

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