Angie Silva has recently opened The Sandal Shop in Manila, 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 P$400$

$160$

P$240$

Fixed expenses per year: Building rental

P$150,000$

Equipment depreciation $8,000$

Selling $50,000$

Administrative $40,000$

Total fixed expenses P$248,000$

Required:

$1.$ Suppose the store can sell $1,500$ pairs of fashionable sandals this year, create a contribution margin income statement using the data provided.

$2.$ What is the break$-$even point in number of units and sales amount? Compare the results of the break$-$even computation and the answer for No$.1$ requirement. After computing relevant information, discuss your analysis and observation.

$3.$ Angie is planning to consider a target profit of P$90,000$ net of $20\%$ income tax. What is the break$-$even point in number of units and sales amount to achieve the target profit? Provide proof by preparing a contribution margin format income statement with P$90,000$ as the net operating income after tax.

$4.$ With the contribution margin format income statement from the information in No$.1,$ compute the margin of safety in percentage and the degree of operating leverage.

$5.$ Assuming Angie is optimistic that the store can sell up to $2,000$ pairs of fashionable sandals during the year. The difference of $500$ pairs of fashionable sandals from the original estimated sale of $1,500$ fashionable sandals is equivalent to an increase of $33\mathrm{.}33\%.$ Using the degree of operating leverage computed in No$.4$ requirement, how much is the expected percentage increase in net operating income?