Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that

was popular in the $1930$ s$.$ The retro$-$look cycle would be sold for $$14,000$ and at that price, Thad estimates $500$ units would be sold

each year. The variable cost to produce and sell the cycles would be $$10,500$ per unit. The annual fixed cost would be $$1,662,500.$

a$.$ What is the break$-$even in unit sales?

Break$-$even in unit sales

b$.$ What is the margin of safety in dollars?

Margin of safety in dollars

c$.$ What is the degree of operating leverage? $($Round your answer to $2$ decimal places.$)$

Degree of operating leverage

Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so$,$ the selling price

for the Western Hombre would have to be reduced to $$12,500$ to compete effectively. In that event, Thad would also reduce fixed

expenses to $$1,496,500$ by reducing advertising expenses, but he still hopes to sell $500$ units per year.

d$.$ What would the net operating income be in this situation? $($Negative amount should be indicated by a minus sign.$)$