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…

Required: 5. Refer to the original data. During the first year, the store sold only 3,000 pairs of sandals and reported the following operating results: Sales (3,000 pairs) Variable expenses Contribution margin Fixed expenses Net operating income $ 84,000 42,000 42,000 28,000 $ 14,000 a. 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% next year. Using the degree of operating leverage, what would be the expected percentage increase in net operating income if Angie is able to increase unit sales by 50%? a. Degree of operating leverage b. Expected percentage increase in net operating income %