The popularity of Skechers products has increased significantly in recent years. Sales increased from $1.560.3 million in 2012 to $3,563.3 million in 2017, for an increase of 128.4 percent. In the same period, operating income increased from $22.3 million to $370.5 million, for an increase of 1,561.4 percent. It should be noted that this growth was not the result of larger acquisitions of or mergers with other companies. Required Write a memorandum that explains how a 128 percent increase in sales could cause a 1,561 percent increase in profits. Your memo should address the following:

A. An identification of the accounting concept involved.

B. A discussion of how various major type of costs incurred by Skechers were likely affected by this increase in its sales.

C. The effect of the increase in sales on Skechers margin of safety.