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 $195,000 per year. The average price for the Tuff-Pup is $36, and the average variable cost is $23 per unit. Currently, Reagan produces and sells 20,000 Tuff-Pups annually. Required: 1. How many Tuff-Pups must be sold to break even? units 2. If Reagan wants to earn $85,800 in profit, how many Tuff-Pups must be sold? units Prepare a variable-costing income statement to verify your answer. Reagan, Inc. Variable-Costing Income Statement 3. Suppose that Reagan would like to lower the break-even units to 9,750. 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 9,750. If required, round your intermediate computations and final answer to the nearest cent. 4. What is Reagan's current contribution margin and operating income? Current contribution margin