1, E3-25 (simila.. Part 5 of 9 5 HW Score: 43.75%, 8.75 of 20 points Points: 8.75 of 20 The McKnight Company manufactures and sells pens. Currently, 5,200,000 units are sold per year at $0.60 per unit. Fixed costs are $860,000 per year. Variable costs are 50 40 per unit Read the requirements Requirement 1. What is the current annual operating income? (a) Start by determining the formula to calculate operating income. Units sold Selling price Variable costs 01 Fixed costs The current annual operating income is Operating income S 180,000 (b) What is the current breakeven point in revenues? Ely 5,200,000 units are sold per year at $0.60 per unit. Fixed costs are $860,000 per year. Variable costs are $0.40 per unit X Requirements Consider each case separately 1. a. What is the current annual operating income? b. What is the current breakeven point in revenues? Compute the new operating income for each of the following changes: 2. A $0.08 per unit increase in variable costs 3. A 20% increase in fixed costs and a 20% increase in units sold 4. A 40% decrease in fixed costs, a 40% decrease in selling price, a 30% decrease in variable cost per unit, and a 45% increase in units sold Compute the new breakeven point in units for each of the following changes: 5. A 20% increase in fixed costs 6. A 20% increase in selling price and a $20,000 increase in fixed costs Print Done