EXERCISE $8-2$

Calculating Break$-$Even Sales $[$LO$1-$ CC$1$; LO$2-$ CC$6]$

Kirk Company's contribution margin ratio on the sale of its most popular product is $35\%.$ The product is priced at $$75,$ and annual fixed

expenses are $$750,000.$ Management is evaluating two options: $(1)$ lowering variable costs by $10\%$ and $(2)$ reducing fixed expenses by $10\%.$

Required:

Calculate the current level of break$-$even sales in dollars, as well as the break$-$even sales for the two options.