The Concept of Budgetary Control and Static Budget Reports Tillman's Toys is preparing its static budget for the upcoming second quarter for one of its best selling toys, a mini drone. Each drone sells for $45 and has unit variable costs of $4 for direct materials, $13 for direct labour and $21 for variable overhead. Fixed costs are $19,000 for volumes from 0 to 10,000 units; $24,000 for volumes from 10,000 to 15,000 and $28,000 for any volume over 15,000 units.

If Tillman determines that it can manufacture and sell 12,500 units in the second quarter, what amount would it report as operating income on its static budget?