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? (CMA adapted)LO1

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Sales Cost of sales: Direct materials Direct labor $250,000 $1,800,000 180,000 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