3. (**) Based on the current profit margin, how much additional sales would Dulaney have to generate in order to have the same effect on pretax earnings as a 10% decrease in merchandise costs?

Dulaney’s Stores has posted the following yearly earnings and expenses:

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EARNINGS AND EXPENSES (YEAR ENDING JANUARY 2008) Sales $50,000,000 Cost of goods sold (COGS) $30,000,000 Pretax earnings 5,000,000 SELECTED BALANCE SHEET ITEMS Merchandise inventory Total assets $2,500,000 $8,000,000