Figure 4-6. Shorter Company had originally expected to earn operating income of $130,000 in the coming year. Shorter's degree of operating leverage is 2.4. Recently, Shorter revised its plans and now expects to increase sales by 20% next year.

7. Refer to Figure 4-6. What is the percent change in operating income expected by Shorter in the coming year?

	a.	8.33%
	b.	48.0%
	c.	20.0%
	d.	54.17%
	e.	30.0%

8. Refer to Figure 4-6. What is Shorter's revised expected operating income for the coming year?

	a.	$192,400
	b.	$156,000
	c.	$312,000
	d.	$130,000
	e.	$62,400

9. Dance Unlimited plans to sell 10,000 ballet shoes at $50 each in the coming year. Unit variable cost is $30 and total fixed cost equals $65,000.

Required:

A.) Calculate the break-even in ballet shoes.

B.) Calculate the break-even in sales dollars.

10. Shamrock Inc. plans to sell 3,000 Irish sweaters for $200 each in the coming year. Product costs include:

Direct materials per sweater		$ 40
Direct labor per sweater		10
Variable overhead per sweater		15
Total fixed factory overhead		20,000

Variable selling expenses are $5 per sweater and fixed selling and administrative expenses total $12,000. Required: A.) Calculate the total variable cost per unit. B.) Calculate the total fixed expenses for the year. C.) Prepare a contribution margin income statement for Shamrock Inc. for the coming year.