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, 2019 ($000 omitted) Sales $ 30, 000 Cost of goods sold Variable $ 13 , 500 Fixed 3, 600 17 , 100 Gross profit $ 12,900 Selling and administrative costs Commissions $ 5,400 Fixed advertising cost 900 Fixed administrative cost 2, 400 8, 700 Operating income $ 4,200 Fixed interest cost 750 Income before income taxes $ 3, 450 Income taxes (30$) 1, 035 Net income $ 2, 415