Online Learning

# DocumentA5

– MEMO and Excel sheet showing work (see bottom of page)Compute the current break-even point in units, and compare it to the break-even point in units if Mary’s ideas are used.Compute the margin of safety ratio for current operations and after Mary’s changes are introduced (Round to nearest full percent).Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary’s changes are introduced.Preparea maximum 700-word informal memo to management addressing Mary’s suggested changes.Explain whether Mary’s changes should be adopted. Why or why not? Analyze the above information (three bullet points above) and use this information to support your suggestion.Scenario: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 \$24,000 in fixed costs to the \$270,000 in fixed costs currently spent. In addition, Mary is proposing 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 Mary’s ideas but concerned about the effects these changes will have on the break-even point and the margin of safety.Purpose of AssignmentThe Case Study focuses on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which allows students to experience working through a business scenario and applying these tools in managerial decision making.Needs to be addressed;- Computed the current break-even point in units, and compared it to the break-even point in units if Mary’s ideas were used- Computed the margin of safety ratio for current operations and after Mary’s changes were introduced (rounded to nearest full percent).-Prepared a CVP (Cost-Volume-Profit) income statement for current operations and after Mary’s changes were introduced- Explained whether Mary’s changes should be adopted.  Why or why not?  Analyzed the information (first three rows above) and used the information to support student’s suggestion.NEEDED:- Showed work in Microsoft® Word orExcel®. Completed calculations/computationsusing Microsoft® Word or Excel®.

DocumentA5