Steve Corporation is using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (240,000 units) $360,000 Less: Cost of goods sold 240,000 Gross margin 120,000 Operating expenses (includes $32,000 of fixed costs) 96,000 Net income $ 24,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.

Required: Prepare a kaizen-based budgeted income statement for March of 2018.