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 Variable expenses per pair of sandals Contribution margin per pair of sandals 20 14 Fixed expenses per year Building rental Equipment depreciation Selling Administrative $ 1,800 1,800 1,800 6,600 $ 12,000 Total fixed expenses Problem 5-30 Part 1 Required 1. What is the break-even point in unit sales and dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in dollar sales pairs Problem 5-30 Graphing; Incremental Analysis, Operating Leverage [L05-2, LO5-4, LO5-5, LO5-6, LO5-8] [The following information applies to the questions displayed belowj 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 Variable expenses per pair of sandals Contribution margin per pair of sandals 20 14 Fixed expenses per year Building rental Equipment depreciation Selling Administrative $ 1,800 1,800 1,800 6,600 $ 12,000 Total fixed expenses Problem 5-30 Part 3 3. Angie has decided that she must earn a profit of $9,000 the first year to justify her time and effort. How many pairs of sandals must be sold to attain this target profit? nit sales to attain target profit pairs Problem 5-30 Graphing; Incremental Analysis; Operating Leverage [L05-2, LO5-4, LO5-5, LO5-6, LO5-8] The following information applies to the questions displayed below.] 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 Variable expenses per pair of sandals Contribution margin per pair of sandals 20 14 Fixed expenses per year Building rental Equipment depreciation Selling Administrative $ 1,800 1,800 1,800 6,600 12,000 Total fixed expenses Problem 5-30 Part 4 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional $6,000 per year to convert the part-time position to a full-time position. Angie believes that the change would increase annual sales by $28,000. Should she convert the position? Use the incremental approach Multiple Choice Yes 0 The following information applies to the questions displayed below.] 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 Variable expenses per pair of sandals Contribution margin per pair of sandals 14 Fixed expenses per year Building rental Equipment depreciation Selling Administrative $ 1,800 1,800 1,800 6,600 $ 12,000 Total fixed expenses Problem 5-30 Part 5 5. Refer to the original data. During the first year, the store sold only 3,000 pairs of sandals and reported the following operating results Sales (3,000 pairs) Variable expenses Contribution margin Fixed expenses Net operating income $ 60,000 42,000 18,000 12,000 $ 6,000 a. What is the store's 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 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 sales by 50%? Degree of operating leverage Expected percentage increase in net operating income a. b
