Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget

Accounting Sep 12, 2020

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.

Sales $3,800,000Cost of sales: Direct material$530,000 Direct labor 400,000 Variable overhead 290,000 Fixed overhead 750,000 1,970,000Gross profit $1,830,000Selling and General & Admin. Exp. Variable 780,000 Fixed 280,000 1,060,000Operating income $770,000

For the coming year, the management of Evergreen Corporation anticipates a 5 percent decrease in sales, a 10 percent increase in variable costs, and a $60,000 increase in fixed costs.

The break-even point for next year would be:

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