1. Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashion sandals. Eventually, she hopes to open a chain of sandal stores. As a first step, you have collected the following data for your new store: Sales price per pair of sandals $32 Variable expenses per pair of sandals 16 Contribution margin per pair of sandals $16 Fixed expenses per year: Building rent $9,600 Depreciation Equipment 12,000 Sales 9,600 Administrative 16,800 Total Fixed Expenses $48,000 

Required: What is the breakeven point in unit and dollar sales?

2. Angie now has two salespeople working in the store, one full-time and one part-time. It will cost her an additional $7,000 per year to convert the part-time position to a full-time position. Angie believes that the change would increase annual sales by $41,600. Should I convert the position? Use the incremental approach.

 3. During the first year, the store sold only 3,500 pairs of sandals and reported the following operating results: Sales (3,500 pairs) $112,000 Variable expenses 56,000 Contribution margin 56,000 Fixed expenses 48,000 Net operating income $8,000 a. What is the store's degree of operating leverage?

4. Angie is confident that with a stronger sales effort and 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 could increase sales by 50%?

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