Jabari Inc. uses the kaizen approach to budgeting for 2020. The budgeted income statement for January 2020 shows:

revenues of $329674;

Direct materials of $74165;

Direct Labour of$60946;

Variable Manufacturing Overhead of $23895,

Fixed Manufacturing Overhead of $17815,

Operating Expenses of $72646.

Under the kaizen approach,

Direct Materials decrease by 4%; Direct Labour increase by 3%; variable overhead decreased by 6%; and Operating Expenses decreased by 2%.

The operating income for the month of February taking into account the kaizen costing changes would be