Gardner Corporation manufactures skateboards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below.

Sales				$	2,060,000
Cost of sales:
Direct material	$	330,000
Direct labor		230,000
Variable overhead		87,000
Fixed overhead		180,000			827,000
Gross profit				$	1,233,000
Selling and general & admin. Exp.
Variable		280,000
Fixed		330,000			610,000
Operating income				$	623,000

For the coming year, the management of Gardner Corporation anticipates a 10 percent increase in sales, a 12 percent increase in variable costs, and a $53,000 increase in fixed costs. The break-even point for next year (rounded to the nearest dollar) would be: (Do not round intermediate calculations.)

Which choice is correct:

• $1,172,170.

• $1,039,094.

• $524,085.

• $674,000.