6. Prepare a new set of budgets (Income Statement, Cash Flow, and Balance Sheet) incorporating the sales manager's plan and assumptions. A few days after you prepared the new budgets, you were having lunch in the staff room and happened to sit next to Wendy, an employee from the marketing department. When she learned that you were the new CFO she said, "I don't understand why the fixed manufacturing costs are allocated to the product lines in proportion to the sales value of the products produced. Doesn't it make more sense to allocate fixed manufacturing costs to the three product lines in proportion to their margin of sales over variable manufacturing cost? That way we would have higher margins on our lipstick and nail polish lines."