1 Data Table March Total 36,000 $ 91,000 Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February Net Sales Revenue (20% increase per month) $ 25,000 $ 30,000 $ Cost of Goods Sold (60% of sales) 15,000 18,000 Gross Profit 10,000 12,000 S and A Expenses ($2,200 + 8% of sales) 4,200 4,600 Operating Income 5,800 7,400 Income Tax Expense (10% of operating income) 580 740 $ 5,220 $ 6,660 $ Net Income 21,600 54,600 36,400 14,400 5,080 13,880 9,320 22,520 932 8,388 2,252 20,268 Print Done - More Info Option 1 is to increase advertising by $900 per month. Option 2 is to use better-quality materials in the manufacturing process. The better materials will increase the cost of goods sold to 65% but will provide a better product at the same sales price. The marketing manager projects either option will result in sales increases of 25% per month rather than 20%. Print Done - Requirements 1. Prepare budgeted income statements for both options, assuming both options begin in January and January sales remain $25,000. Round all calculations to the nearest dollar. 2. Which option should Gambrell choose? Explain your reasoning. Print Done Gambrell Company prepared the following budgeted income statement for the first quarter of 2018: (Click the icon to view the budgeted income statement.) Gambrell Company is considering two options. Click the icon to view the options.) Read the requirements Requirement 1. Prepare budgeted income statements for both options, assuming both options begin in January and January sales remain $25,000. Round all calculations to the nearest dollar. Begin by preparing the budgeted income statement for Option 1. Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Total Sales Revenue Cost of Goods Sold Gross Profit S and A Expenses Operating Income Income Tax Expense Net Income Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) Gambrell Company Budgeted Income Statement For the Quarter Ended March 31. 2018 Enter any number in the edit fields and then continue to the next question. Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Total Sales Revenue Cost of Goods Sold Gross Profit S and A Expenses Operating Income Income Tax Expense Net Income Requirement 2. Which option should Gambrell choose? Explain your reasoning. because net income for the quarter is expected to be higher under this option. However, because both options are expected to yield net income for the quarter than the $20,268 If one of the two options is chosen, it would be currently budgeted, Gambrell may decide Enter any number in the edit fields and then continue to the next question. Time Remaining: 01:57:45 Next