Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2017, is as follows:

Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2017, is as follows KLYNE CORPORATION Income Statement For the Year Ending December 31, 2017 Sales $ 27,500,000 Cost of goods sold Variable Fixed $13,200,000 2,873,000 16,073,000 Gross margin Selling and marketing expenses 11,427,000 Commissions Fixed costs 5,775,000 3,345,000 9,120,000 Operating income $ 2,307,000 Klyne is considering hiring its own sales staff to replace the network of agents. Klyne will pay its salespeople a commission of 15% and incur fixed costs of $2,083,000 Required 1. Calculate Klyne Corporation's break-even point in sales dollars for the year 2017. (Round your answer to 2 decimal places.) Break-even point 20,058,064.50 2. Calculate Klyne Corporation's break-even point in sales dollars for the year 2017 if the company had hired its own sales force to replace the network of agents. (Round your answer to 2 decimal places.) Break-even point 146,702.70 3. Calculate the degree of operating leverage at sales of $27,500,000, considering (a) Klyne uses sales agents and (b) Klyne employs its own staff. Describe the advantages and disadvantages of each alternative. (Round your answers to 2 decimal places.) Degree of operating leverage Using sales agent Employing own sales staff