The management at Inverness Manufacturing feels confident about the company's prospect in the current year (year 2). Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked the budget team to prepare a draft forecast for the year and to analyze the differences from last year's results. They decided to base the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. They worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow: Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 225,000 units, and planned sales volume is 200,000 units. Sales and production volume was 150,000 units last year. The company uses a fullabsorption costing and FIFO inventory system and is subject to a 20 percent income tax rate. The actual income statement for last year follows: Required: Prepared a budgeted income statement and balance sheet for year 2 . \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Budgeted Income Statement } & \\ \hline Revenue: & & \\ \hline Sales revenue & & \\ \hline Other income & & \\ \hline \multicolumn{2}{|c|}{ Total revenue } & \\ \hline Expenses: & & \\ \hline Cost of goods manufactured and sold: & & \\ \hline Materials & & \\ \hline Direct labor & & \\ \hline Variable overhead & & \\ \hline Fixed overhead & & \\ \hline Total current manufacturing costs & \\ \hline Beginning inventory & & \\ \hline Total cost of goods manufactured & & \\ \hline Ending inventory & & \\ \hline Marketing: & & \\ \hline Salaries & & \\ \hline Commissions & & \\ \hline Promotions and advertising & & \\ \hline Administrative: & & \\ \hline Salaries & & \\ \hline Travel & & \\ \hline Office costs & & \\ \hline Income taxes (credit) & & \\ \hline Total expenses & & \\ \hline Operating profit (loss) & & \\ \hline \end{tabular}