USA Margin of safety and break even point problem?


Joined
Feb 4, 2021
Messages
1
Reaction score
0
Country
Canada
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?
 
Last edited:
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

Break even point - contribution margin. 0
finding break even point 1
USA Break-even point analysis 0
UK Break Even Analysis 0
USA Calculating Break-Even 2
Break-Even Price not Showing Up 1
USA Margin Interest Reporting 1
UK VAT Margin Scheme 6

Top