A firm make and sells surfboards using revolutionary manufacturing processes and materials. The firm sells its surfboards for $110 to its distributors. The surfboards require $32 of foam and fiberglass and 1.0 direct labor hours and annual fixed costs of $475,000. The firm compensates its manufacturing employees at the rate of $25 per hour. The firm also applies variable manufacturing overhead at the rate of 60% of direct labor dollars. If the firm increases the quality of its direct materials, it will experience the following new product costs:

$45 direct materials

80% of the original labor hours

$50,000 more fixed costs

Applied overhead rate of 50% of the direct labor dollars

What is the percentage change in sales dollars required to breakeven if the firm changes to the higher quality materials?

14.3%

17.7%

26.3%

50.0%