Break-Even in Sales Revenue, Changes in Variables

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

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

Required:

1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places. $________________

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? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted) $________________