The Kalman Company, a subsidiary of the Camper Corporation, submits interim financial statements. Camper combines these statements with similar statements from other subsidiaries to prepare its quarterly statements. The following data are taken from the records and accounts of the Kalman Company, (a) Sales forecasts for the year are as follows:

Sales have been achieved as forecasted in the first and second quarters of the current year.
(b) Management is considering increasing the selling price of a stove from $30 to $34. However, management is concerned that this price increase may reduce the already low sales volume forecasts for the third and fourth quarters.
(c) The production schedule calls for 1,500,000 stoves this year. The manufacturing facilities can produce 1,720,000 units per year or 430,000 units per quarter during regular hours. The following quarterly production schedule was developed to meet the seasonal sales demand and is being followed as planned.

(d) The standard manufacturing cost of a stove unit, as established at the beginning of the current year, is as follows. This standard cost does not incorporate any charges for overtime.
Materials$4.00
Labor9.00
Variable factory overhead2.00
Fixed factory overhead3.00
Standard cost per stove$18.00
(e) A significant and permanent price increase in the cost of raw materials resulted in a material price variance of $270,000 for the materials used in the second quarter. Unplanned variances that are significant and permanent in nature are prorated to the applicable accounts during the quarter in which they occur.
(f) There was a $36,000 unfavorable direct labor efficiency variance in the second quarter, which occurred as a result of unexpected inefficiencies. These inefficiencies are not regarded as significant, and they are not expected to recur.
(g) The second quarter unfavorable factory overhead spending variance of $126,000 was partially due to overtime paid during the second quarter and partially due to unexpected inefficiencies. Because overtime was incurred to produce enough product to meet the sales forecasts, the portion of the spending variance attributable to overtime is prorated between quarters on the basis of budgeted sales. Management does not expect to incur overtime in the last half of the year. The overtime premium is 50% of the standard labor rate.
(h) Total fixed factory overhead expected to be incurred and budgeted for the year is $4,500,000. Through the first two quarters, $2,745,000 of fixed factory overhead was applied to production. Of this amount, $1,350,000 was applied in the second quarter. The high production activity resulted in a total favorable fixed factory overhead volume variances of $495,000 for the first two quarters. However, because the fixed over head rate is based on annual expected production of 1,500,000 units, a volume variance is reported on interim statements only if actual production differs from the planned production schedule.
(i) Selling expenses are 10% of sales and are expected to total $4,500,000 for the year,
(j) Administrative expenses are $6,000,000 annually and are incurred uniformly through- out the year.
(k) Inventory balances as of the end of the second quarter follow:
Materials (at actual cost) $400,000
Work in Process (50% complete-at standard cost) 72,000
Finished Goods (at standard cost) 900,000
(1) The stove product line is expected to earn $7,500,000 before taxes this year. The estimated state and federal income tax expenses for the year are $3,750,000.
Required:
Prepare the second quarter interim income statement for the Kalman subsidiary of Camper Corporation.

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Percent 30% 40 10 20 100% Quarter First Stove Units 450,000 600,000 150,000 300,000 1,500,000 Third. Fourth Scheduled Production (in units) 465,000 450,000 225,000 360,000 1,500,000 Quarter Percent 31% 30 15 24 100% First Second Third.