Margin of Safety Head-First Company plans to sell 5,080 bicycle helmets at $68 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 2,152. Required: 1. Calculate the margin of safety in terms of the number of units. units, then Calculate the margin of safety in terms of sales revenue. Impact of Increased Sales on Operating Income Using the Degree of Operating Leverage Now suppose Head-First Company had planned to sell 5,000 bicycle helmets at $76 each in the coming year. Unit variable cost is $47 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $95,500. The degree of operating leverage is 1.5. Now Head-First expects to increase sales by 10% next year. 1. Calculate the percent change in operating income expected. %_____ 2. Calculate the operating income expected next year using the percent change in operating income calculated in Requirement 1 Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Finally, Prachi Company produces and sells disposable foil baking pans to retailers for $2.40 per pan. The variable cost per pan is as follows: Direct materials $0.21 Direct labor 0.59 Variable factory overhead 0.65 Variable selling expense 0.14 Fixed manufacturing costs totals $181,479 per year. Administrative cost (all fixed) totals $24,747. Required: 1. Compute the number of pans that must be sold for Prachi to break even. _____ pans 2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent. Unit variable cost $____ Unit variable manufacturing cost $______ How many units must be sold for Prachi to earn operating income of $5,751? _______ pans 4. How much sales revenue must Prachi have to earn operating income of $5,751? $_________