compute the computer retail store rsquo s budgeted operating income for 2011 643075

(Budgeted income statement) 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 per cent 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.