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Merline Manufacturing makes its product for $55 per unit and sells it for $147 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows.

Merline Manufacturing Income Statement for Month ended December 31, 2019

Sales $1,470,000

Cost of goods sold 550,000

Gross profit 920,000

Operating expenses

Sales commissions (10%) 147,000

Advertising 234,000

Store rent 25,700

Administrative salaries 48,500

Depreciation-office equip 58,500

Other expenses 13,700

Total expenses 527,400

Net income $392,600

Management expects December's results to be repeated in January, February, and March of 2020 without any changes in strategy. Management, however, has an alternative plan. It believes that unit sales will increase at a rate of 10%eachmonth for the next three months (beginning with January) if the item's selling price is reduced to $132 per unit and advertising expenses are increased by 15% and remain at that level for all three months. The cost of its product will remain at $55 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same.

Prepare budgeted income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes.