Home / Questions / Purpose of Assignment The Case Study focuses on CVP (Cost-Volume-Profit), break-even, and
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.
Resources
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:
Prepare a maximum 500-word informal memo to management addressing Mary's suggested changes.
USEthe memo template provided in week 1.
Showyour work in Excel.
Completecalculations/computations using Excel.
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