Vandelay Industries uses a number of performance criteria to evaluate its foreign operations, including return on investment. Compagnie de Charlevoix, its Canadian subsidiary based in the Province of Quebec, submits the income statement shown below for the current fiscal year (translated to U.S. dollar equivalents):

Compagnie de Charlevoix Income Statement

Sales		$4,200,000
Other income		120,000
		$4,320,000
Costs and expenses:
Cost of goods sold	$3,200,000
Selling and administrative expense	330,000
Depreciation expense	160,000
Interest expense	162,000
Foreign exchange losses	368,000	4,220,000
Income before taxes		$ 100,000
Income taxes		33,000
Net income		$ 67,000

Included in sales are components worth $500,000 (arms length sales price per unit times number of units) that were sold by Compagnie de Charlevoix to its sister subsidiary in Czechia at a transfer price set by corporate headquarters at 40 percent above the arms-length price per unit. Cost of goods sold includes excess labor costs of $150,000 owing to local labor laws. Administrative expenses include $50,000 of headquarters expenses, which Vandelay allocates to Compagnie de Charlevoix.

Local financing decisions are centralized at corporate treasury at Vandelay headquarters in New Orleans, as are all matters related to tax planning. Vandelay assesses Compagnie de Charlevoix a capital charge based on Charlevoixs net assets and the parent companys (i.e. Vandelays) average cost of capital. This figure, which amounts to $120,000, is included in the $162,000 interest expense figure. One-half of the exchange gains and losses figure is attributed to transactions losses resulting from Charlevoixs export activities. The balance is due to translating the Canadian accounts to U.S. dollars for consolidation purposes. Exchange risk management is also centralized at corporate treasury.

Required:

Based on the foregoing information, prepare an income statement based on controllable profit to be used in evaluating the performance of the manager of Compagnie de Charlevoix for the current year.