Requirement 2. At this level of sales, what is Dress Foot's operating leverage factor? lfvolume declines by 9% due to increasing competition, by what percentage WI\" the company's operating income decline? Begin by identifying the formula to compute the operating leverage factor at the target level of operating income, Contribution margin + Operating income = Operating Ievemge fad\" (Round your answer to two decimal places ) s The operating leverage factor is 1.33 , (Round the percentage to the nearest hundredth percent, X XX% ) ' If volume decreases 9%, operating income will decrease '12 42 \"/u Requirement 3. Competition has forced Dress Foot to lower its sales price to $9 a pair How will this affect Dress's breakeven paint? (Round your answer up to the next whole number) 1 Dress's new breakeven point Increases to 3,334 units Dress Foot buys hiking socks for $6 a pair and sells them for $10, Monthly xed costs are $10,000 (for sales volumes between 0 and 10,000 pairs), resulting in a breakeven point of 2,500 units Assume that Dress Foot has been setting 9,000 pairs of socks per month Read the muirements Requirement 1. What is Dress Foot's cuent margin of safety in units, in sales dollars, and as a percentage? Explain the results Begin by identifying the formula to compute the margin of safety in units Expected sales in units 7 Breakeven sales in units : Margin of gafety in units ' The margin of safety in units is 6,500 Next, identify the formula to compute the margin of safety in dollars. Expected sales in dollars _ Breakeven sales in dollars : Margin of safety in dollars The margin of safety in dollars is $ 55,999 , Now identify the formula to compute the margin at safety as a percentage Margin of safety Margin of safety in units , Expected sales in units : as a percentage (Round the percentage to the nearest hundredth percent, X,XX%,) ' Tho marnin nr natal" nnrrantano in 79 77 w. Requirement 4. 10 compensate 10I the lower Sales price, Dress FOOL wants to expand Its product line to Include men's dress SOCKS. Each pall Will Sell 101 3/.VU and Cost 32 Itom ine Supplier. Fixed COSTS will not Change. Dress expects to Sell louI pairs Of dress socks for every one pair of hiking socks (at its new $9 sales price). What is Dress's weighted-average contribution margin per unit? Given the 4:1 sales mix, how many of each type of sock will it need to sell to breakeven? Complete the following table to compute the weighted-average contribution margin per unit. (Enter all amounts to the nearest cent.) Hiking socks Dress socks Total Sale price per unit $ 9.00 $ 7.00 Less: Variable cost per unit 6.00 2.00 Contribution margin per unit S 3.00 $ 5.00 Sales mix 5 Contribution margin S 3.00 $ 20.00 S 23.00 4.60 Weighted-average contribution margin per unit Given the 4:1 sales mix, how many of each type of sock will it need to sell to breakeven? (Round only the new target sales in units up to the next whole number. Then round the allocation of hiking and dress socks to the nearest whole number.) The new target sales in units is .The company will need to sell pairs of the hiking socks and pairs of the dress socks
