Barnes 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.
Sales $1,500,000
Cost of sales:
Direct materials $250,000
Direct labor 150,000
Variable overhead 75,000
Fixed overhead 100,000 (575,000)
Gross profit $925,000
Selling and G&A:
Variable $200,000
Fixed 250,000 (450,000)
Operating income $475,000
For the coming year, the management of Barnes Corporation anticipates a 10% increase in sales, a 12% increase in variable costs, and a $45,000 increase in fixed expenses. The breakeven point for next year will be