Gardner Corporation Manufactures Skateboards and Is in the Process of Preparing

Multiple Choice

Gardner Corporation manufactures skateboards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below.
$\begin{array}{lr}\text {Sales}&&\$ 1,500,000\\\text {Cost of sales:}\\\text { Direct Material } & \$ 250,000 \\\text { Direct labor } & 150,000 \\\text { Variable Overhead } & 75,000 \\\text { Fixed Overhead } & 100,000&575,000\\\text { Gross Profit } & & \$ 925,000 \\\text { Selling and G\&A } & & \\\text { Variable } & 200,000 & \\\text { Fixed } & 250,000 & 450,000 \\\text { Operating Income } & & \$ 475,000\end{array}$

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For the coming year, the management of Gardner Corporation anticipates a 10 percent increase in sales, a 12 percent increase in variable costs, and a $45,000 increase in fixed costs.
The break-even point for next year (rounded to the nearest dollar) would be:

A) $729,027.
B) $862,103.
C) $214,018.
D) $474,000.