Nasrin sultana is the advertising manager for bata 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 $ 32000 in fixed cost to the $288000 currently spent. In addition, Nasrin is proposing that 5% price decrease($40 to $38) will produce a 20% increase in sales volume (20000 to 24000). Variable cost will remain at $ 22 per pair of shoes. Management is impressed with Nasrin's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Required:
a) Compute the current break-even point in units and compare it to the break-even point in units if Nasrin's ideas are used.
b) Prepare a CVP income statement for current operations and after Nasrin's changes are introduced. Would you make the changes suggested