(The follo.ving 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 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 $ 11,300 11.300 9.000 13,400 $ 45,000 Problem 5-30 Part 1 Required: 1. What is the break-even point in unit sales and dollar sales? (Do not round Intermediate calculations.) Break-even point in unit Sales pain Break-even point in dollar sales {The following information applies to the questions displayed below.) Angle 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 Variable expenses per pair of sandals Contribution margin per pair of sandals Pixed expenses per year. Building rental Equipment depreciation Selling Administrative Total fixed expenses $ 11,300 11,300 9.000 13.400 $ 45,000 Problem 5-30 Part 3 3. Angie has decided that she must earn a profit of $22,500 the first year to justify her time and effort. How many pairs of sandals must be sold to attain this target profit? Unit sales to attain target profit pains 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: $ 15 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 $ 11,300 11,300 9.000 13.400 $45.000 Problem 5-30 Part 4 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional $9.000 per year to convert the part-time position to a full-time position. Angle believes that the change would increase annual sales by $39.000. Should she convert the position? Use the incremental approach. Multiple Choice 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 $ 11,300 11,300 9,000 13.400 $ 45,000 Problem 5-30 Part 5 5. Refer to the original data. During the first year, the store sold only 4,000 pairs of sandals and reported the following operating results: Sales (4,000 pairs) Variable expenses Contribution margin Fixed expenses Net operating income $ 120,000 60,000 60,000 45,000 $ 15,000 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 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 sales by 50%? a. Degree of operating leverage b. Expected percentage increase in not operating income
