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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
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 Fixed expenses per year: 28 14 14 Building rental Equipment depreciation Selling Administrative 4,200 4,280 7,880 12,600 $ 28,808 Total fixed expenses . Refer to the original data. During the first year, the store sold o esults pairs of sandals and reported the following operating Sales (4,000 pairs) Variable expenses Contribution margin Fixed expenses Net operating income s 112,00e 56,000 28,000 $ 28,809 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 creativ next year. Using the degree of operating leverage, what would be the expected percentage increase in net operating income if Angle is able to increase sales by 50%? er tising program she can increase sales by 50%
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