9 Required InformationProblem 5-30 (Algo) Graphing; Incremental Analysis; Operating Leverage [LO5-3, LO5-4, LO5-6, LO5-7, LO5-8][The following information applies to the questions displayed below.]Angie Silva recently opened The Sandal Shop in Brisbane, Australia, a store specializing in fashionable sandals. Intime, she hopes to open a chain of sandal shops. As a first step, she gathered the following data for her new store:Sales price per pair of sandalsVariable expenses per pair of sandalsContribution margin per pair of sandalsFixed expenses per year:Building rentalEquipment depreciationSellingAdministrativeTotal fixed expenses$ 2814$ 14$ 4,2004,2007,00012,600$ 28,000Problem 5-30 (Algo) Part 5Required:5. Refer to the original data. During the first year, the store sold only 3,000 pairs of sandals and reported the following operatingresults:Sales (3,000 pairs)Variable expensesContribution marginFixed expenses$ 84,00042,00042,00028,000Net operating income$ 14,000a. What is the store's degree of operating leverage?b. Angie is confident a more intense sales effort and with a more creative advertising program will increase unit sales by 50% nextyear. Using the degree of operating leverage, what would be the expected percentage increase in net operating income if Angie isable to increase unit sales by 50%?a. Degree of operating leverageb. Expected percentage increase in net operating income96

The degree of operating leverage is an important ratio which shows how much the earnings before…

Answered: Required: 5. Refer to the original…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3TIF

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