BREAK-EVEN IN SALES DOLLARS, CHANGES IN VARIABLES

BREAK-EVEN IN SALES DOLLARS, CHANGES IN VARIABLES

Lauterbach Corporation manufactures skateboards and is in the process of preparing next year’s budget. The pro forma income statement for the current year is as follows:
Sales

$1,500,000
Cost of sales:

Direct materials
$250,000

Direct labor
150,000

Variable overhead
80,000

Fixed overhead
100,000
580,000
Gross profit

$ 920,000
Selling and administrative expenses:

Variable
$300,000

Fixed
250,000
550,000
Operating income

$ 370,000
Required:
1. What is the break-even point (rounded to the nearest dollar) for Lauterbach Corporation for the current year?
2. For the coming year, the management of Lauterbach Corporation anticipates a 10 percent increase in variable costs and a $45,000 increase in fixed expenses. What is the break-even point in dollars for next year?