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, 2020, is as follows:

KLYNE CORPORATION Income Statement For the Year Ending December 31, 2020
Sales			$	27,500,000
Cost of goods sold
Variable	$	13,200,000
Fixed		2,873,000		16,073,000
Gross margin				11,427,000
Selling and marketing expenses
Commissions		5,775,000
Fixed costs		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 Corporations break-even point in sales dollars for the year 2020. (Round your answer to 2 decimal places.)

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.)

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.)

4. If Klyne increases the commission paid to its sales staff to 20%, 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.)