Happy Toes produces sport socks. The company has fixed expenses of $100,000 and variable expenses of $1.00 per package. Each package sells for $2.00. The number of packages Happy Toes needed to sell to earn a $26,000 operating income was 126,000 packages. If Happy Toes can decrease it variable costs to $0.80 per package by increasing its fixed costs to $115,000, how many packages will it have to sell to generate $26,000 of operating income? Is this more or less than before? Why? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( Fixed expenses Operating income > Contribution margin per unit = Sales in units (Round your answer up to the nearest whole unit.) Happy Toes will have to sell 117,500 packages to generate $26,000 of operating income. Is this more or less than before? Why? more Happy Toes would have to sell packages of socks to earn $26,000 of operating income. The increase in fixed costs completely offset by the in variable costs at the prior target profit volume of sales. Therefore, Happy Toes will need to sell units in order to achieve its target profit level