Break$-$Even in Units, Target Income, New Unit Variable Cost, Degree of Operating Leverage, Percent Change in Operating Income Suppose that Reagan would like to lower the break$-$even units to $9,750.$ 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 $9,750.$ If required, round your intermediate computations and final answer to the nearest

cent.

$

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

Current contribution margin

Current operating income

$

$

Calculate the degree of operating leverage. Round your answer to three decimal places.

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, $45\mathrm{.}555\%$ would be entered as $"45\mathrm{.}56").$

$\%$

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

$

Reagan, Inc., has used data on the Tuff$-$Pup to answer a number of different questions. Identify the data analytic type $($descriptive$,$ diagnostic, predictive, or

prescriptive$)$ that Reagan used to answer these questions. $($See Exhibits $2\mathrm{.}5$ and $2\mathrm{.}6,$ for a review of data analytic types. Note: More than one analytic type might

apply.$)$

$$ analysis will help Reagan understand the break$-$even point and units needed to earn a target profit.

$$ analysis helps Reagan to understand what happens when variables are changed.

Prescriptive $$ analysis would be used if Reagan determines that a target profit must be earned and then uses the data to change price, variable cost, and

fixed cost to achieve that profit.

Reagan, Inc., has developed a chew$-$proof dog bed$-$the Tuff$-$Pup. Fixed costs are $$195,000$ per year. The average price for the Tuff$-$Pup is $$36,$ and the average variable

cost is $$23$ per unit. Currently, Reagan produces and sells $20,000$ Tuff$-$Pups annually.

Required:

How many Tuff$-$Pups must be sold to break even?

$$ units

If Reagan wants to earn $$84,500$ in profit, how many Tuff$-$Pups must be sold?

$$ units

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

Reagan, Inc.