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Required information Skip to question [ The following information applies to the questions displayed below. ] Angie Silva has recently opened The Sandal Shop in

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[The following information applies to the questions displayed below.]
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 $ 32
Variable expenses per pair of sandals 16
Contribution margin per pair of sandals $ 16
Fixed expenses per year:
Building rental $ 6,400
Equipment depreciation 8,000
Selling 4,800
Administrative 12,800
Total fixed expenses $ 32,000
5. Refer to the original data. During the first year, the store sold only 3,000 pairs of sandals and reported the following operating results:
Sales (3,000 pairs) $ 96,000
Variable expenses 48,000
Contribution margin 48,000
Fixed expenses 32,000
Net operating income $ 16,000
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 unit 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 unit sales by 50%?

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