Bargain Shoe Store. Memo on Suggested Company Changes

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.
Assignment Steps
Complete the following:
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.
Prepare a 600- 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.
Show your work in Microsoft Word or Excel.
Complete calculations/computations using Microsoft Word or Excel.
(I did the calculations and attached it in a file)

a.)    Break-even point = Fixed costs/Unit contribution

Current break-even point=$270,000/16   = 16,875

New break-even point=($270,000 + $24,000)/14 =21,000

b.)    Margin of Safety ratio = (Total sales-Break even sales)/Total sales)

Current margin of safety ratio = (20000-16,875)/20000=15.63%

New margin of safety ratio = (24000-21,000)/24000=12.5%

c.)