2 Part 2 of 2 2.5 points eBook Print 0 References Required information 5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $19,000, and at that price, Thad estimates he could sell 200 units each year. The variable cost to produce and sell the cycles would be $13,300 per unit. The annual fixed cost would be $1,083,000. a. What is the break-even in unit sales? Break-even in unit sales b. What is the margin of safety in dollars? Margin of safety in dollars Degree of operating leverage 190 $ c. What is the degree of operating leverage? Note: Round your answer to 2 decimal places. 190,000 Net operating income (loss) d. Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so, the selling price for the Western Hombre would have to be reduced to $17,300 to compete effectively. In that event, Thad also would reduce fixed expenses to $943,000 by reducing advertising expenses, but he still hopes to sell 200 units per year. What would the net operating income be in this situation? Note: Negative amount should be indicated by a minus sign. Check

5. Thad Morgan, a motorcycle enthusiast, has been exploring the possiblity of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $19,000, and at that peice, Thad estimstes he could sell 200 units each year. The variable cost to produce and seli the cycles would be $13,300 per unit. The annual frod cost would be $1,083,000 a. What is the break-even in unat sales? b. What is the margin of safety in dollars? c. What is the degree of operating leveroge? Note: Round your answer to 2 decimal places. d. Thad is worried about the selling price. Rumors are circulatng that other retro brands of cycles may be revived if so, the seling price for the Western Hombre wovid have to be reduced to $17,300 to compete effectively in that event. Thad also would reduce fixed expenses to $943,000 by reducing advertsing expenses, but he sta hopes to sell 200 unats per year. What would the net operating income be in this stuation? Note: Negative amount should be indicated by a minus sign