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Vernon Cabins is a small motel chain located near state and national parks. Each property is made up of separate cabins. The chain has $10$ properties with an average of $33$ cabins at each property. In year $1,$ the occupancy rate $($the number of rooms filled divided by the number of rooms available$)$ was $80$ percent, based on a $180-$day season. The properties are closed from late fall until early spring. The average rate was $$315$ per night per cabin. The basic unit of operation is the $$night$,$ which is one cabin occupied for one night.

The operating income for year $1$ is as follows.

Vernon Cabins

Operating Income

Year $1$

Sales revenue

Lodging $ $5,040,000$

Incidentals $1,900,800$

Forfeited deposits $427,680$

Total revenues $ $7,368,480$

Costs

Labor $ $4,468,160$

Incidentals $1,627,680$

Miscellaneous $190,080$

Utilities, etc. $185,000$

Depreciation $640,000$

Management $210,000$

Marketing $320,000$

Property taxes $1,820,000$

Total costs $ $9,460,920$

Operating profit $($loss$)$ $ $(2,092,440)$

Other revenues consist of incidentals $($vending machine purchases, supplies, and so on$)$ and forfeited deposits. In year $1,$ incidentals revenue averaged $$40$ per night. Reservations require a deposit. Guests who fail to cancel before three nights prior to a stay forfeit the deposit. In year $1,$ forfeited deposits averaged $$9$ per night.

In year $1,$ the average fixed labor cost was $$290,000$ per property. The remaining labor cost was variable with respect to the number of nights. The costs of incidentals include $$120,000$ per season per property. The remaining cost of incidentals is variable with respect to the number of nights. Miscellaneous costs are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs $($management$,$ marketing, and property taxes$)$ are fixed for the firm.

At the beginning of year $2,$ Vernon will close one of its properties with no change in the average number of rooms per property. The occupancy rate is expected to decrease to $70$ percent. Management has made the following additional assumptions for year $2$:

The average room rate will increase by $10$ percent.

Incidental revenues per night are expected to increase by $5$ percent.

The forfeited deposit revenue per night is not expected to change.

The fixed labor cost is expected to increase by $12$ percent per property. The variable labor cost per night is not expected to change.

Incidental cost factors are not expected to change.

The miscellaneous cost for a night is expected to increase by $25$ percent.

Utilities costs per property are expected to increase by $20$ percent.

Depreciation costs per property are forecast to remain unchanged.

Management costs will increase by $4$ percent and marketing costs will decrease by $6$ percent.

Property taxes will decrease by $$216,000$ with the closing of the one property.

Required:

Prepare a budgeted income statement for year $2.$

Note: Do not round intermediate calculations. Round final answers to the nearest dollar.