In a recent report to stockholders, the management of a large corporation stated that lower sales volume, coupled with higher material and labor costs, resulted in a first-quarter loss of $131,000, compared with a profit of $525,000 in the first quarter of the preceding year. In order to keep costs and expenses in line with anticipated volume, budgeted fixed costs and expenses for the current year were reduced from $28.3 million to $25 million, thus reducing the break-even sales level from $80.4 million to “a more comfortable $76 million.”

List some ways that fixed costs and expenses can be reduced and mention several other actions which were probably taken by management to attain a lower break-even point. LO6