Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statement for the year ending December 31, 2020, is as follows:

KLYNE CORPORATION Income Statement For the Year Ending December 31, 2020
Sales			$	34,500,000
Cost of goods sold
Variable	$	15,525,000
Fixed		3,039,490		18,159,000
Gross margin				16,341,000
Selling and marketing expenses
Commissions		6,210,000
Fixed costs		3,760,000		9,970,000
Operating income			$	6,419,500

Klyne is considering hiring its own sales staff to replace the network of agents. Klyne will pay its salespeople a commission of 10% and incur fixed costs of $2,080,000.

Required:

1. Calculate Klyne Corporations break-even point in sales dollars for the year 2020. (Round your answer to 2 decimal places.)

Break-even point

2. Calculate Klyne Corporations break-even point in sales dollars for the year 2020 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

3. Calculate the degree of operating leverage at sales of $34,500,000, 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

4. If Klyne increases the commission paid to its sales staff to 15%, keeping all other costs the same, how much revenue (in dollars) would Klyne have to generate to earn the same operating income it did in 2020? (Round your answer to 2 decimal places.)

Revenue (in dollars)