Reagan, Inc., has developed a chew-proof dog bedthe 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:

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1. How many Tuff-Pups must be sold to break even? fill in the blank 6f3155fe605c05b_1 units

2. If Reagan wants to earn $65,000 in profit, how many Tuff-Pups must be sold? fill in the blank 6f3155fe605c05b_2 units

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Prepare a variable-costing income statement to verify your answer.

blank Reagan, Inc. Variable-Costing Income Statement

Contribution marginFixed expensesSalesVariable cost	$- Select -
Less: Contribution marginLess: Fixed expensesLess: SalesLess: Variable cost	- Select -
Contribution marginFixed expensesSalesVariable cost	$- Select -
Less: Contribution marginLess: Fixed expensesLess: SalesLess: Variable cost	- Select -
Contribution marginFixed expensesOperating incomeOperating loss	$- Select -

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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. If required, round your intermediate computations and final answer to the nearest cent. $fill in the blank f23869f8f01d06e_1

4. What is Reagan's current contribution margin and operating income?

Current contribution margin	$fill in the blank f23869f8f01d06e_2
Current operating income	$fill in the blank f23869f8f01d06e_3

Calculate the degree of operating leverage. Round your answer to three decimal places. fill in the blank f23869f8f01d06e_4

If sales increased by 10 percent next year, what would the percent change in operating income be? Use your rounded answer to the question above in your computations, and round your final percentage answer to two decimal places (for example, 45.555% would be entered as "45.56"). fill in the blank f23869f8f01d06e_5 %

What would the new total operating income for next year be? Round your answer to the nearest dollar. $fill in the blank f23869f8f01d06e_6