5-Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data for her new store:

Sales price per pair of sandals	$ 40
Variable expenses per pair of sandals	20
Contribution margin per pair of sandals	$ 20
Fixed expenses per year:
Building rental	$ 10,000
Equipment depreciation	8,000
Selling	8,000
Administrative	14,000
Total fixed expenses	$ 40,000

1. What is the break-even point in unit sales and dollar sales?

Break-even point in unit sales

Break-even point in dollar sales

6-Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data for her new store:

Sales price per pair of sandals	$ 40
Variable expenses per pair of sandals	20
Contribution margin per pair of sandals	$ 20
Fixed expenses per year:
Building rental	$ 10,000
Equipment depreciation	8,000
Selling	8,000
Administrative	14,000
Total fixed expenses	$ 40,000

3. Angie has decided that she must earn a profit of $20,000 the first year to justify her time and effort. How many pairs of sandals must be sold to attain this target profit?

Unit sales to attain target profit ?

Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data for her new store:

Sales price per pair of sandals	$ 40
Variable expenses per pair of sandals	20
Contribution margin per pair of sandals	$ 20
Fixed expenses per year:
Building rental	$ 10,000
Equipment depreciation	8,000
Selling	8,000
Administrative	14,000
Total fixed expenses	$ 40,000

4. Angie now has two salespersons working in the storeone full time and one part time. It will cost her an additional $8,000 per year to convert the part-time position to a full-time position. Angie believes that the change would increase annual sales by $48,000. Should she convert the position? Use the incremental approach.

Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data for her new store:

Sales price per pair of sandals	$ 40
Variable expenses per pair of sandals	20
Contribution margin per pair of sandals	$ 20
Fixed expenses per year:
Building rental	$ 10,000
Equipment depreciation	8,000
Selling	8,000
Administrative	14,000
Total fixed expenses	$ 40,000

5. Refer to the original data. During the first year, the store sold only 2,500 pairs of sandals and reported the following operating results:

Sales (2,500 pairs)	$ 100,000
Variable expenses	50,000
Contribution margin	50,000
Fixed expenses	40,000
Net operating income	$ 10,000

a. What is the stores degree of operating leverage?

b. Angie is confident that with a more intense sales effort and with a more creative advertising program she can increase unit sales by 50% next year. Using the degree of operating leverage, what would be the expected percentage increase in net operating income if Angie is able to increase unit sales by 50%?

a.Degree of operating leverage

b. Expected percentage increase in net operating income