Adams Corporation has three divisions, each operating as a responsibility center. To provide an incentive for divisional executive officers, the company gives divisional management a bonus equal to $19$ percent of the excess of actual net income over budgeted net income. The following is Atlantic Division$$s current year$$s performance.

Current Year

Sales revenue $ $4,170,000$

Cost of goods sold $2,340,000$

Gross profit $1,830,000$

Selling & administrative expenses $760,000$

Net income $ $1,070,000$

The president has just received next year$$s budget proposal from the vice president in charge of Atlantic Division. The proposal budgets a $7$ percent increase in sales revenue with an extensive explanation about stiff market competition. The president is puzzled. Atlantic has enjoyed revenue growth of around $12$ percent for each of the past five years. The president had consistently approved the division$$s budget proposals based on $7$ percent growth in the past. This time, the president wants to show that he is not a fool. $$I will impose a $17$ percent revenue increase to teach them a lesson!$$ the president says to himself smugly.

Assume that cost of goods sold and selling and administrative expenses remain stable in proportion to sales.

Required

a$.$ Prepare the budgeted income statement based on Atlantic Division$$s proposal of a $7$ percent increase.

b$-1.$ Prepare an income statement with $12$ percent growth.

b$-2.$ If growth is actually $12$ percent as usual, how much bonus would Atlantic Division$$s executive officers receive if the president had approved the division$$s proposal?

c$.$ Prepare the budgeted income statement based on the $17$ percent increase the president imposed.

d$.$ If the actual results turn out to be a $12$ percent increase as usual, how much bonus would Atlantic Division$$s executive officers receive since the president imposed a $17$ percent increase?