The following information is available for year 1 for Pepper Products:

Sales revenue (190,000 units)

$

3,800,000

Manufacturing costs

Materials

$

224,000

Variable cash costs

190,000

Fixed cash costs

438,000

Depreciation (fixed)

1,336,000

Marketing and administrative costs

Marketing (variable, cash)

565,000

Marketing depreciation

201,000

Administrative (fixed, cash)

684,000

Administrative depreciation

100,000

Total costs

$

3,738,000

Operating profits

$

62,000

All depreciation charges are fixed and are expected to remain the same for year 2.

Sales volume is expected to fall by 5 percent, but prices are expected to rise by 17 percent.

Material costs per unit are expected to increase by 8 percent.

Other unit variable manufacturing costs are expected to decrease by 7 percent per unit. Fixed cash costs are expected to increase by 4 percent.

Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 3 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.

REQUIRED:

Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)