Suzy's store, Quilt Barn, buys quilts from local quilters for $250 each and sells them in her online store for $350. She leases a little shop space for $1000 per month and pays $1200 a month in saleries.
1. How many quilts does Suzy have to sell in order to break even?
2. How many quilts would she need to sell to break even if rent goes up to $1500?
3. Now assume that Suzy sells 80 quilts in the last month. What is her operating income? (Use a CM income statement to prove your work)
4. If she sell 80 quilts, what is her margin of safety (both in $ and as a percentage)
5. Use your CM income statement from above to find her operating leverage factor
6. Suzy wonders what will happen to her net income next month if her sales increase by 10%. Give her a specific answer, relying on the operating leverage factor from above.