(CVP; operating leverage) Brenda’s Nail Salon provides sculptured nail mani¬ cures for $40. Variable cost per set is $10 and monthly fixed cost is $1,050.

a. What is the break-even point in units and sales dollars?

b. If Brenda Boudreaux, the owner, wants the business to earn a pre-tax profit of 40 percent of revenues, how many manicures must be done in a month?

c. If the salon currently has 40 customers per month, what is the degree of operating leverage?

d. If the salon can increase sales by 35 percent above the current level, what will be the increase in net income? What will be the new net in¬ come? Prove your calculations with an income statement.

LO.1