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Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing...

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Accounting

Break-Even in Sales Revenue, Changes in Variables

Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows:

Sales $1,800,000
Cost of sales:
Direct materials $250,000
Direct labor 180,000
Variable overhead 106,000
Fixed overhead 100,000 636,000
Gross profit $1,164,000
Selling and administrative expenses:
Variable $400,000
Fixed 350,000 750,000
Operating income $414,000

Required:

1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places. $________________

2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted) $________________

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