Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Angie has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store:

Sales price per pair of sandals	$	3.20
Variable expenses per pair of sandals		0.96
Contribution margin per pair of sandals	$	2.24
Fixed expenses per year:
Building rental	$	30,000
Equipment depreciation		7,000
Selling		45,000
Administrative		30,000
Total fixed expenses	$	112,000

Required: 1. How many pairs of sandals must be sold each year to break even? What does this represent in total dollar sales? Break-even point in unit sales Break-even point in dollar sales pairs 3. Angie has deciced that she muct eam atleas $4,480 the first year to Justity her time and effert. How many pairs of sandais must be sold to reach this targer profit? t sales to attsin target proft psrs 4. Angie now has two salespersons working in the storeonefull time and one part time. It will cost her an additional $12,000 per year to convert the part-time position to a full-time position. Angie believes that the change would bring in an additional $44,000 in sales each year. Should she convert the position? Use the incremental approach. O No Yes 5 Refer to the original data. During the first year, the store sold only 74,500 pairs of sandals and reported the following operating resuits: 3228,400 71,520 166,880 Sales (74,500 paira) Contribution margin Fxed expenses Net cparating income a What is the store's degree of operating leverage? (Round your answer to 2 decimal places.) b. Angie is confident that with a more intense sales effort and with a more creative advertising program she can increase sales by 20% next year. What would be the expected percentage increase in net operating income? Use the degree of operating leverage concept to compute your answer. Round your percentage answer to 2 decimal places (i.e.1234 should be entered as 12.34)