Lionel Corporation manufactures pharmaceutical products sold through a network of sales agents in the United States and Canada. The agents are currently paid an 18% commission on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019:

Lionel Corporation Budgeted Income Statement For the Year Ending June 30, 219 [$DD omitted] Sales Cost of goods sold Variable $13,535 Fixed 3,536 Gross profit Selling and administrative costs Commissions $ 5,454 Fixed advertising cost 909 Fixed administrative cost 2,424 Operating income Fixed interest cost Income before income taxes Income taxes [3%} net income $34,300 1?,2Tl $13,029 3,?3? 5 4.242 T53 $ 3.494 1,u45 5 2,439