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P K Chapter 5: Applying Excel Data 72,000 units $70 per unit Unit sales Selling price per Variable expense $49 per unit $945,000 Fixed expenses Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relationships Compute the CM ratio and variable expense ratio ? per unit per unit Selling price per Variable expense Contribution mar ? per unit ? CM ratio Variable expense Compute the break-even Break-even in un ? units Break-even in do ? Compute the margin of safety Margin of safety 7 Margin of safety Compute the degree of operating leverage 7 EB E E TT A . J K M N P Break-even in un ? units Break-even in do ? Compute the margin of safety Margin of safety ? Margin of safety ? Compute the degree of operating leverage Sales ? Variable expense Contribution mar ? 7 Fixed expenses Net operating ind Degree of operat Required information (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income (loss) (b) By what percentage did the net operating income increase? Percentage increase in net operating incon % ome 5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $17,000 and at that price, Thad estimates 800 units would be sold each year. The variable cost to produce and gell the cycles would be $11,900 per unit. The annual fixed cost would be $3,876,000. a. What is the break-even in unit sales? Break-even in unit sales Required information 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 $15,700 to compete effectively. In that event, Thad would also reduce fixed expenses to $3,528,000 by reducing advertising expenses, but he still hopes to sell 800 units per year. d. What would the net operating income be in' this situation? (Negative amount should be indicated by a minus sign.) Net operating income (oss)