Break-Even in Units, Target Income, New Unit Variable Cost, Degree of Operating Leverage, Percent Change in Operating Income

Reagan, Inc., has developed a chew-proof dog bedthe Tuff-Pup. Fixed costs are $176,000 per year. The average price for the Tuff-Pup is $35, and the average variable cost is $24 per unit. Currently, Reagan produces and sells 20,000 Tuff-Pups annually.

Required:

1. How many Tuff-Pups must be sold to break even? fill in the blank 674f24036ff8031_1 units

2. If Reagan wants to earn $61,600 in profit, how many Tuff-Pups must be sold? fill in the blank 674f24036ff8031_2 units

Prepare a variable-costing income statement to verify your answer.

Reagan, Inc. Variable-Costing Income Statement $fill in the blank 331da900202d014_2 fill in the blank 331da900202d014_4 $fill in the blank 331da900202d014_6 fill in the blank 331da900202d014_8 $fill in the blank 331da900202d014_10 3. Suppose that Reagan would like to lower the break-even units to 8,800. The company does not believe that the price or fixed cost can be changed. Calculate the new unit variable cost that would result in break-even units of 8,800. If required, round your intermediate computations and final answer to the nearest cent. $fill in the blank 162c83015fd2017_1 4. What is Reagans current contribution margin and operating income?

Current contribution margin $fill in the blank 162c83015fd2017_2 Current operating income $fill in the blank 162c83015fd2017_3 Calculate the degree of operating leverage. Round your answer to three decimal places. fill in the blank 162c83015fd2017_4 If sales increased by 10 percent next year, what would the percent change in operating income be? Use your rounded answer to the question above in your computations, and round your final percentage answer to two decimal places (for example, 45.555% would be entered as "45.56"). fill in the blank 162c83015fd2017_5 %

What would the new total operating income for next year be? Round your answer to the nearest dollar. $fill in the blank 162c83015fd2017_6