Marilyn's Specialties produces high quality quilts. Labor and materials costs are particularly high. The following is an income statement for last Sales (1.000 units) $520,000 COGS Direct materials Direct labor Variable overhead Fixed overhead $190,000 200,000 91.000 40,000 5521.000) Gross margin ($1,000) Selling and administrative expenses Variable $14,000 Fixed 20,000 $34.000) Operating Income 535.000) 1. What is Marilyn's break-even point in units? 2. How many quilts must Marilyn sell to earn pre-tax operating profht of $40,000? 3 Marilyn suspects that she could replace some of the seamstresses (direct labor) with machines. If she were to do that, all of the following changes are expected to occur increased fixed manufacturing costs by $100,000 per year increased variable overhead costs by $20 per quilt decreased direct labor by $150 per quilt increased sales units by 25% What will Marilyn's operating income be if she replaces the seamstresses? $