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	$	34
Variable expenses per pair of sandals		17
Contribution margin per pair of sandals	$	17
Fixed expenses per year:
Building rental	$	12,800
Equipment depreciation		12,800
Selling		10,200
Administrative		15,200
Total fixed expenses	$	51,000

5. Refer to the original data. During the first year, the store sold only 4,000 pairs of sandals and reported the following operating results:

Sales (4,000 pairs)	$	136,000
Variable expenses		68,000
Contribution margin		68,000
Fixed expenses		51,000
Net operating income	$	17,000

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 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%?