Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 26% 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			$	30,000,000
Cost of goods sold
Variable	$	15,900,000
Fixed		2,878,000		18,778,000
Gross margin				11,222,000
Selling and marketing expenses
Commissions		7,800,000
Fixed costs		3,170,000		10,970,000
Operating income			$	252,000

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 $2,088,000.

Required:

1.	Calculate Klyne Corporations break-even point in sales dollars for the year 2017. (Round your answer to 2 decimal places.)

2.	Calculate Klyne Corporations 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.)

3.	Calculate the degree of operating leverage at sales of $30,000,000, 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.)

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 2017? (Round your answer to 2 decimal places.)