Pens-Co produces and sells hockey sticks. The company's income statement for the most recent month is given below: Sales (6,000 units at S40 per unit) Less manufacturing costs S240,000 Direct materials Direct labor (variable) Variable factory overhead Fixed factory overhead S48,000 60,000 12,000 30,000 150,000 90,000 Gross margin Less selling and other expenses: Variable selling and other expenses.. Fixed selling and other expense.......... 24,000 42,000 66,000 Net operating income There is no beginning or ending inventory Required: Answer the following items and explain ifrequired. SHOW ALL COMPUTATIONS. ROUND TO NEAREST UNIT OR DOLLAR. 1. Given the most recent income statement compute the following a. Break-even sales in hockey sticks b. Break-even sales in dollars c. Degree of operating leverage- d. Sales in sticks that would be required to achieve to earn an after-tax income of $20,000 per month (assume a 30% effective tax rate) 2. Assume the following independent changes a. If sales increase by 20% with no change in total fixed expenses, then the % change in N01- b. Assume that management anticipates the following: An 8 percent increase in the unit sales price; a 5 percent increase in unit variable costs; and increased fixed expenses of $10,000. The new breakeven point in sales dollars- c. Instead, assume that the company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 40 percent, but double fixed factory overhead costs. The new break even point in sticks 3. Return to the original income statement information. Assume that processing is performed by a machine that is currently being leased for $10,000 per month (included in fixed factory OH). Pens-Co has been offered a revised contract whereby it would pay $1,000 per month and a $2.00 royalty per hockey stick produced by the machine rather than the current lease amount. a. Under the royalty plan compute the break-even point in dollars- b. Under the royalty plan determine the sales in hockey sticks that would be required to produce after-tax income of $20,000- c. Should the company choose the lease or the royalty plan? Logically support your