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Teri Hall has recently opened Sheer Elegance, Inc., a store specializing in fashionable stockings. Ms. Hall has just completed a course in managerial accounting, and she believes that she can apply certain aspects of the course to her business. She is particularly interested in adopting the cost-volume-profit (CVP) approach to decision making. Thus she has prepared the following analysis: Sales Price per pair of stockings= $49.00 Variable expense per pair of stockings= 19.60 Contribution margin per pair of stockings= $29.40 Fixed expenses per year: Building rental= $12,348 Equipment depreciation= 3,087 Selling= 30,870 Administrative= 15,435 Total fixed expense= $61,740 1. How many pairs of stockings must be sold to break even? What does this represent in total dollar sales? Break-even point in unit sales=_____ pairs Break-even point in dollar sales= $______ 3. How many pairs of stockings must be sold to earn a $14,000 target profit for the first year? Unit sales to attain target profit=____ pairs 4. Ms. Hall has one full-time and one part-time salesperson working in the store. It will cost her an additional $10,600 per year to convert the part-time position to a full-time position. Ms. hall believes that the change would bring in an additional $24,000 in sales each year. Should she convert the position? Use the incremental approach. 5. Refer to the original data. Actual operating results for the first year are as follows: Sales= $147,000 Variable Expenses= 58,800 Contribution Margin= 88,200 Fixed expenses= 61,740 Net operating income=$26,460 a) what is the store's degree of operating leverage? b)Ms hall is confident that with some effort she can increase sales by 29% next year. What would be the expected percentage increase in net operating income? Use the degree of operating leverage concept to compute your

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