Break-Even in Units, Target Income, New Unit Variable Cost, Degree or Operating Leverage, Percent Change in Operating Income Reagan, Inc., has developed a chew-proof dog bed-the Tuff-Pup. Fixed costs are $200,000 per year. The average price for the Turf-Pup is $36, and the average variable cost is $23 per unit. Currently, Reagan produces and sells 20,000 Turf-Pups annually. Required: 1. How many Tuff-Pups must be sold to break even? units 2. If Reagan wants to earn $70,200 in profit, how many Turf-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 10,400. 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 10,400. 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 Current operating income Calculate the degree of operating leverage. Round your answer to three decimal places. 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"). 96 What would the new total operating income for next year be? Round your answer to the nearest dollar. 5. Reagan, Inc., has used data on the Turf-Pup to answer a number of different questions. Identify the data analytic type (descriptive, diagnostic, predictive, or prescriptive) that Reagan used to answer these questions. (See Exhibits 2.5 and 2.6, for a review of data analytic types. Note: More than one analytic type might apply.) analysis will help Reagan understand the break-even point and units needed to eam a target profit. analysis helps Reagan to understand what happens when variables are changed. analysis would be used if Reagan determines that a target profit must be earned and then uses the data to change price, variable cost, and fixed cost to achieve that profit. Data analyties would be used in Requirement 3 as Reagan decides to lower the break-even point and uses the analysis to determine why the breakeven is higher than desired