Bolster Corporation produces a molded plastic casing for its video game consoles. Summary data from its 2018 income statement are as follows:

Revenues	$4,400,000
Variable costs	2,640,000
Fixed costs	2,025,000
Operating Loss	$ (265,000)

Bolster's President, Wanda Bolster-Bernie is very concerned about the company's poor profitability. She asked the production manager and controller to see if there are ways to reduce costs. The production manager suggests that variable costs can be reduced to 55% of revenues by reducing the cost the company currently incurs for safe disposal of wasted plastic. The controller is concerned that this would expose the company to potential environmental liabilities and they need to estimate some of these potential environmental costs and include them in their analysis. The production manager feels like they are not violating any laws at present but Bolster could possibility incur some very stiff environmental penalties after 2020. Further, he said, "The market is very tough and we are in danger of shutting down the company; the only reason their competitors are making money is because they are already cutting corners and taking environmental risks."

1. Calculate the break-even revenues at the current level of sales. (Show all calculations)
2. Calculate the break-even revenues if variable costs are reduced to 55% of revenues. (Show all calculations)
3. Calculate the operating income (or loss) with Wanda's proposed change at the current level of sales. (Show all calculations)
4. What advice would you give to Wanda? Comment on both quantitative and qualitative factors that you considered. (3-4 sentences)