Evergreen Corporation Manufactures Circuit Boards and Is in the Process

Multiple Choice

Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below. $$\begin{array} { | l | l | l | } \hline \text { Sales } & & \$ 3,500,000 \\\hline \text { Cost of sales: } & & \\\hline \text { Direct Material } & \$ 500,000 & \\\hline \text { Direct labor } & 250,000 & \\\hline \text { Variable Overhead } & 275,000 & \\\hline \text { Fiked Overhead } & \underline { 600,000 } & 1,625,000 \\\hline \text { Gross Profit } & & \$ 1,876,000 \\\hline \text { Selling and General \& Admin. Exp. } & & \\\hline \text { Variable } & 750,000 & \\\hline \text { Fiked } & 250,000 & 1,000,000 \\\hline \text { Operating Income } & & \$ 875,000 \\\hline\end{array}$$
The break-even point (rounded to the nearest dollar) for Evergreen Corporation for the current year is:

A) $2,625,000.
B) $1,865,672.
C) $1,724,138.
D) $2,155,172.