Purpose of Assignment
The 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.
Assignment Steps
Resources:Generally Accepted Accounting Principles (GAAP) U.S. Securities and Exchange Commission (SEC)
Tutorial help on Exceland Word functions can be found on the MicrosoftOffice website. There are also additional tutorials via the web offering support for Office products.
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 $24000 in fixed costs to the $270000 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 (20000 to 24000). 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.
Completethe following:
Preparea maximum 700-word informal memo to management addressing Mary’s suggested changes.
Showyour work in MicrosoftWord or Excel.
Completecalculations/computations using MicrosoftWord or Excel.
Formatyour assignment consistent with APA guidelines.