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

Required:
1. What is the break-even sales revenue (rounded to the nearest dollar) for Carmichael Corporation for the current year?
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?

Transcribed Image Text:

Sales Cost of sales: S1,800,000 Direct materials Direct labor Variable overhead Fixed overhead $250,000 180,000 106,000 00,000 636,000 S1,164,000 Gross profit Selling and administrative expenses: Variable Fixed $400,000 350,000 750,000 S414,000 Operating income