Problem
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 $14,000 and at that price, Thad estimates 600 units would be sold each year. The variable cost to produce and sell the cycles would be $9,800 per unit. The annual fixed cost would be $1,890,000.
a. What is the break-even in unit sales?
b. What is the margin of safety in dollars?
c. What is the degree of operating leverage?
d. What would the net operating income be in this situation?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.