The operating results in summarized form for a retail computer store for 2010 are:

Revenue:

Hardware sales ...........$4,800,000

Software sales ........... 2,000,000

Maintenance contracts ........ 1,200,000

Total revenue ............$8,000,000

Costs and expenses:

Cost of hardware sales .........$3,360,000

Cost of software sales ........ 1,200,000

Marketing expenses ......... 600,000

Customer maintenance costs ....... 640,000

Administrative expenses ........ 1,120,000

Total costs and expenses ....... $(6,920,000)

Operating income ...........$1,080,000

The computer store is in the process of formulating its operating budget for 2011 and has made the following assumptions:

• The selling prices of hardware are expected to increase 10 percent but there will be no selling price increases for software and maintenance contracts.

• Hardware unit sales are expected to increase 5 percent with a corresponding 5 percent growth in the number of maintenance contracts; growth in unit software sales is estimated at 8 percent.

• The cost of hardware and software is expected to increase 4 percent.

• Marketing expenses will be increased 5 percent in the coming year.

• Three technicians will be added to the customer maintenance operations in the coming year, increasing the customer maintenance costs by $120,000.

• Administrative costs will be held at the same level.

Compute the computer retail store’s budgeted operating income for 2011.