ATC 3 ng Assignment Operating leverage, margin of safety, and cost behavior orm 10-K Skechers U.S.A., Inc. describes itself as follows In 1 its qwe design and market Skechers-branded lifestyle footwear for men, women and children, and performance wenvear for men and women under the Skechers GO brand name. As of February 15, 2015, we owned nd operated 119 concept stores, 146 factory outlet stores and 98 warehouse outlet stores in the United and 51 concept stores, 33 factory outlet stores, and three warehouse outlet stores internationally. pularity of Skechers' products has increased significantly in recent years. Sales increased from $1 operating 560.3 million in 2012 to $2,377.6 million in 2014, for an increase of 52.4 percent. In the same period. income increased from $22.3 million to $209.0 million, for an increase of 837 percent. It should oted that this growth was not the result of larger acquisitions of or mergers with other companies. Required a memorandum that explains how a 52 percent increase in sales could cause an 837 percent e in profits. Your memo should address the following: increas a. An identification of the accounting concept involved. sion of how various major types of costs incurred by Skechers were likely affected by the increase in its sales. The effect of the increase in sales on Skechers' margin of safety C