The management of Barnes Corporation anticipates a 10 percent increase in total sales, a 12 percent…

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 (100 units at $100 a unit)

 

$1,500,000

Cost of goods sold:

 

 

Direct labor (variable)

$250,000

 

Direct materials

150,000

 

Variable factory overhead

75,000

 

Fixed factory overhead

100,000

575,000

Gross margin

 

925,000

Selling expenses:

 

 

Variable

200,000

 

Fixed

250,000

450,000

Net operating income

 

$ 475,000

For the coming year, the management of Barnes Corporation anticipates a 10 percent increase in sales, a 12 percent increase in variable costs, and a $45,000 increase in fixed expenses.
The break-even point for next year would be
A. $729,027.
B. $862,103.
C. $214,018.
D. $474,000.
E. $700,000.