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(a) What is net operating income? Note: Negative amount should be indicated by a minus sign. (b) By what percentage did the net operating income increase? 5. Thod 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 $15,000, and at that price, Thad estimates he could sell 800 units each year. The variable cost to produce and sell the cycles would be $10,500 per unit. The annual fixcd cost would be $2,700,000. a. What is the break-even in unit sales? (a) What is net operating income? Note: Negative amount should be indicated by a minus sign. (b) By what percentage did the net operating income increase? 5. Thod 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 $15,000, and at that price, Thad estimates he could sell 800 units each year. The variable cost to produce and sell the cycles would be $10,500 per unit. The annual fixed cost would be $2,700,000. a. What is the break-even in unit sales? d. 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 $12,000 to compete effectively. In that event, Thad also would reduce fixed expenses to $2,403,000 by reducing advertising expenses, but he still hopes to sell 800 units per year. What would the net operating income be in this situation? Note: Negative amount should be indicated by a minus sign

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