The following information is available for year 1 for Pepper Products:

All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 5 percent, but prices are expected to rise by 15 percent. Material costs per unit are expected to increase by 12 percent. Other unit variable manufacturing costs are expected to decrease by 10 percent per unit. Fixed cash costs are expected to increase by 4 percent. Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.
Required
Prepare a budgeted income statement for year 2.

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Manufacturing costs $ 168,000 142,400 327,600 999,000 Fixed cash costs . _ . . . . Marketing and administrative costs 422,400 149,600 509,200 74,800 $2.793,000 $ 57,000 Administrative (fixed, cash) . . .