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 Excel^® and Word functions can be found on the Microsoft^® Office 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 $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.

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 maximum 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^®.

Format your assignment consistent with APA guidelines.

Write a argumentative essay about this topic. Please follow the outline pictures(one is model and other one is mine). For my outline, you can change a little bit. This essay doesn’t need high grammar, just be normal. 2 page is better, no more than 3.

I would like you to write me 300 words journal answering the questions that show in the picture and please don’t copy anything from online.

2-4 paragraphs

Since your last meeting with Mr. Potts, you have learned that because he is home so infrequently, he does not spend much quality time sober with his children. He recently missed their dance recital and their dance competitions. The girls excel at dance and have won numerous awards, none of which Mr. Potts has been around for. Mr. Potts has never missed work because of drinking, although you have learned that he sleeps only 4–5 hours per night and is typically hung over the next day after being out drinking the night before. He has very little patience, chain smokes, and has many regrets in his life (although drinking is not yet one of them). When asked about his children, he appears to know very little about them. He is unable to tell you who each child’s best friend is, what each child’s favorite color is, what television shows they like to watch, what music interests them, or what foods they like to eat. He cannot recall ever doing any activity with either of them, whether individually or together. He is not sure of their schedule, and he has never been to a school parent/teacher conference or any doctor or dentist appointments. However, he is very vocal in his expectation that his children excel in school and get all As. He did disclose that he reviews their report cards to be sure they are getting all As.

Mr. and Mrs. Potts travel frequently as a couple with different retail groups, and these trips are paid for by the manufacturers of the furniture that Mr. Potts carries in his stores. The children do not come on these trips. There are about two per year, each lasting for 1 week. When asked about these trips during an interview, Mrs. Potts’s face elongates and she looks down. She is very guarded in her responses to you as the probation officer. You learn that these trips are a source of great stress for Mrs. Potts because all decisions are left up to her. She decides and plans for the child care for the children when they travel, she does the packing, and she even has to pick out all of Mr. Potts’s clothing. During these trips, Mr. Potts is intoxicated most of the time except the mornings, and Mrs. Potts is left to deal with his intoxication, embarrassing behavior, and other antics.

Mr. Potts has a heart condition and has suffered from three heart attacks in the past 6 years. In addition, he had triple bypass surgery 18 months ago. He takes numerous medications for his heart condition. The doctors have clearly articulated to him that they believe that his years of heavy drinking have impacted the functioning of his heart. They have advised him explicitly that Mr. Potts must stop drinking if he wants to live. Despite this medical advice and his failing heart, he continues to drink and smoke excessively. His wife and children have spent numerous days and nights at the hospital while he recovered from his surgery and heart attacks.

Sarah, the 10-year old, dotes on her father whenever she has the opportunity. She sympathizes with him, gets him beers out of the refrigerator when he is home drinking, and is always trying to take the stress away from the family caused by Mr. Potts’s drinking.

Cindy, the 11-year old, is an angry child. She lashes out verbally and behaviorally at both her parents. Her parents do not know it, but she has recently began self-mutilating behaviors in the form of cutting her forearms, writing the words “help me” with a knife.

Given the additional information that you have learned about the Potts family during your interviews, do the following:

• Explain how Mr. Potts’s alcohol-related medical condition has impacted his children and wife.
• Use the facts and your knowledge of alcohol abuse and alcoholism to specifically address the impact of the medical condition on each member of the family.