Kanban Company estimated sales of 40,000 units at $6 each. Budgeted cost of goods sold per unit includes $1.20 of direct materials, six minutes of direct labor time at $15 per hour, and unit overhead cost of $1.30. Kanban pays a sales commission of 10% of sales revenue. Fixed selling and administrative expenses are budgeted at $25,000. Prepare a statement of operating income.

A. Budgeted variable marketing expense is $__________________.

B. Budgeted operating income is $__________________.

C. Recalculate budgeted operating income assuming fixed selling and administrative expenses double and the selling price per unit increases 10%.