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! Required information (The following information applies to the questions displayed below.] Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store
! Required information (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: $ 26 13 $ 13 Sales price per pair of sandals Variable expenses per pair of sandals Contribution margin per pair of sandals Fixed expenses per year: Building rental Equipment depreciation Selling Administrative Total fixed expenses $ 3,900 6,500 3,900 11,700 $ 26,000 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) Variable expenses Contribution margin Fixed expenses Net operating income $ 78,000 39,000 39,000 26,000 13,000 a. What is the store's 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%? a. Degree of operating leverage b. Expected percentage increase in net operating income %
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