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 bed--the Tuff-Pup. Fixed costs are $150,000 per year. The average price for the Tuff Pup is $35, and the average variable cost is $25 per unit. Currently, Reagan produces and sells 20,000 Tuff-Pups annually. Required: 1. How many Tuff-Pups must be sold to break even? 15,000 units 2. If Reagan wants to earn $66,000 in profit, how many Tuff-Pups must be sold? 21,600 units Prepare a variable-costing income statement to verify your answer. Reagan, Inc. Variable-Costing Income Statement Sales Less: Variable cost Contribution margin Less: Fixed expenses Operating income 3. Suppose that Reagan would like to lower the break-even units to 7,500. 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 7,500.IT 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. Check My Work 2 more Check My Work uses remaining Previous Next >