Direct materials purchases 260,000 Direct materials beginning inventory 16,000 Less: direct materials ending inventory (24,000) Direct materials costs in production 252,000 Direct labor costs in production 336,000 MOH costs in production 462,000 Cost of goods manufactured 1,050,000 Finished goods beginning inventory 100,000 Less: finished goods ending inventory (150,000) Cost of goods sold 1,000,000 Budgeted Income Statement Sales revenue 2,000,000 Cost of goods sold (1,000,000) Gross margin 1,000,000 Selling & administrative expenses (812,000) Operating income 188,000 Interest expense (3,000) Net income before taxes 185,000 Income taxes (74,000) Net income after taxes 111,000