7. What is Hixson's break-even point in unit sales? What is its break-even point in dollar sales? (Do not round your intermediate values.) 8. How much will Hixson's net operating income increase if it can grow production and sales from 25,000 units to 26,500 units? 9. What is Hixson's margin of safety at a sales volume of 25,000 units? (Do not round your intermediate values.) 10. What is Hixson's degree of operating leverage at a sales volume of 25,000 units? (Round your answer to 1 decimal places.) 1. Total product costs incurred $ 500,000 Total period costs incurred 2$ 275,000 2. Variable manufacturing cost per unit produced $ 14.00 Average fixed manufacturing cost per unit produced 3. Variable manufacturing cost per unit produced Average fixed manufacturing cost per unit produced 4. Total direct manufacturing costs incurred $ 6.25 $ 14.00 2$ 5.77 $ 351,000 Total indirect manufacturing costs incurred $ 177,000 5. Total incremental manufacturing cost incurred $ 14.00 6. Contribution margin per unit $ 15.00 Contribution margin ratio 44.1 % 7. Break-even point in unit sales Units Break-even point in dollar sales 8. Increase in net operating income 9. Margin of safety 10. Degree of operating leverage

Break-even analysis is used to calculate the units sold to recover the cost of goods sold i.e fixed cost and variable cost. [Note: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts for you. To get the remaining sub-part solved please repost the complete question and mention the sub-parts to be solved.]Answer 7 Sales price = 34 Variable cost per unit= Direct material + Direct labor + Variable manufacturing overhead + Sales commission + Variable administrative expense = 8+5+1+4+1 = 19 Contribution margin = ( 34 – 19 ) = 15 Fixed cost = ( 6 + 3.50 + 2.50) * 25,000 Break even point in unit sales = Fixed cost / Contribution margin per unit = 300,000 /15 = 20,000 Break even point in dollar sales = Fixed cost / Contribution margin ratio = 300,000 /44.1% = 680,272Answer 8 Sales price = 34 Variable cost per unit= Direct material + Direct labor + Variable manufacturing overhead + Sales commission + Variable administrative expense = 8+5+1+4+1 = 19 Contribution margin = ( 34 – 19 ) = 15 Fixed cost = ( 6 + 3.50 + 2.50) * 25,000 = 300,000 Operating income at 25,000 units Operating income = ( Sales * Contribution margin per unit ) – Fixed cost = ( 25,000 * 15 ) – 300,000 = 75,000 Operating income at 26,500 = ( 26,500 * 15 ) – 300,000 = 97,500 Increase in operating income= 97,500 – 75,000 = 22,500 Answer 9 Margin of safety = Profit / Contribution margin ratio = 75,000 / 44.1 % = 170,068 or 170,000 ( approx. )