Seattle Cat is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data(attached) to use in its annual budgeting process:

Prepare the company's budgeted income statement using an absorption income statement format shown below.

Seattle Cat

Budgeted Income Statement

Sales: $2,000,000

Cost of goods sold: $1,300,000

Gross margin: $700,000

Selling and administrative expenses: $576,000

Net operating income: $124,000

Interest expense: $21,900

Net income: $102,100