Required:

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

The following information is available for year 1 for Pepper Products: $8,410,000 $ 496,000 421,000 970,000 2,958,000 Sales revenue (290,000 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits 1,250,000 444,000 1,510,000 221,000 $8,270,000 $ 140,000 All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 3 percent, but prices are expected to rise by 11 percent. Material costs per unit are expected to increase by 10 percent. Other unit variable manufacturing costs are expected to decrease by 5 percent per unit. Fixed cash costs are expected to increase by 6 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