Angle Silva has recently opened The Sandal Shop in Brisbane, Australa, 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: $ 26 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 13 $ 13 $ 3,900 6,500 3,900 11,700 Total fixed expenses $ 26,000 5. Refer to the original data. During the first year, the store sold only 3.000 palrs of sandals and reported the following operating results: Sales (3,000 pairs) Variable expenses Contribution margin Fixed expenses $ 78,008 39,000 39,e00 26,000 Net operating income $ 13,000 a. What is the store's degree of operating leverage? b. Angle is confident that with a more Intense sales effort and with a more creative advertising program she can Increase unit sales by 50% next year. Using the degree of operating leverage, what would be the expected percentage Increase in net operating Income if Angle is able to Increase unit sales by 50%? a. Degree of operating leverage b. Expected percentage increase in net operating income

Angle Silva has recently opened The Sandal Shop in Brisbane, Australa, 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: $ 26 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 13 $ 13 $ 3,900 6,500 3,900 11,700 Total fixed expenses $ 26,000 5. Refer to the original data. During the first year, the store sold only 3.000 palrs of sandals and reported the following operating results: Sales (3,000 pairs) Variable expenses Contribution margin Fixed expenses $ 78,008 39,000 39,e00 26,000 Net operating income $ 13,000 a. What is the store's degree of operating leverage? b. Angle is confident that with a more Intense sales effort and with a more creative advertising program she can Increase unit sales by 50% next year. Using the degree of operating leverage, what would be the expected percentage Increase in net operating Income if Angle is able to Increase unit sales by 50%? a. Degree of operating leverage b. Expected percentage increase in net operating income

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Current Attempt in Progress Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her goals for the next 11 months are to sell one mixer per month and to give two to three classes per week. The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination). Assume that Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory. The following transactions occur in February to May 2022. Feb. 2 16 25 Mar. 2 30 31 Apr. 1 13. 30 May 4 27 Natalie buys two deluxe mixers on account from Kzinski Supply Co. for $1,170 ($585 each), FOB destination, terms n/30. She sells one deluxe mixer for $1.100 cash. She pays the amount owed to Kzinski. She buys one deluxe mixer on account from Kzinski Supply Co. for $603, FOB…
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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 $ 30 Variable expenses per pair of sandals 15 Contribution margin per pair of sandals $ 15 Fixed expenses per year: Building rental $ 11,300 Equipment depreciation 11,300 Selling 9,000 Administrative 13,400 Total fixed expenses $ 45,000 1. What is the break-even point in unit sales and dollar sales? (Do not round intermediate calculations.)
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Assume Rajan Manufacturing Ltd makes sports vest for local soccer, baseball, basketball, and other sports teams. Rajan, the owner, purchases the vests and prints graphics on the vests for each team. The graphics were designed several years ago, so design costs are no longer incurred. On average, Rajan sells 1,000 vests each month. Typical monthly financial data is shown below: Per Unit Total Monthly Data at 1,000 Vests Sales revenue $20 $20 000 Variable costs: Direct materials $8 $8 000 Direct labour 2 2 000 Manufacturing overhead 3 13 3 000 13 000 Contribution margin $ 7 $ 7 000 Fixed costs (rent, salaries, etc.) 4 000 Profit $ 3 000 The monthly information provided relates to the company’s routine monthly operations. A representative of the local university recently approached Rajan to ask about a one-time special…
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