Adria Lopez expects second quarter 2014 sales of her new line of computer furniture to be the same as the first quarter's sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,250) and 20 chairs (sales price of $500).

Success Systems
Segment Income Statement
For quarter ended March 31, 2014
Sales	$180,000
Cost of goods sold	115,000
Gross Profit	65,000
Expenses
Sales commissions (10%)	18,000
Advertising expenses	9,000
Other fixed expenses	18,000
Total Expenses	45,000
Net Income	$20,000

(Reflects revenue and expense activity only related to the computer furniture segment; Revenue: (120 desks x $1,250) + (60 chairs x $500) = $150,000 + $30,000=$180,000; Cost of goods sold: (120 desks x $750) + (60 chairs x $250) + $10,000=$115,000)

Adria Lopez believes that sales will increase each month for the next three months (April, 48 desks, 32 chairs; May, 52 desks, 35 chairs; June, 56 desks, 38 chairs) if selling prices are reduced to $1,150 for desks and $450 for chairs, and advertising expenses are increased by 10% and remain at the level for all three months. The products' variable cost wil remain at $750 for desks and $250 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,000 and other fixed expenses will remain at $6,000 per month.

1. Prepare budgeted income statements for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month.

2. Use the budgeted income statements from part 1 to recommend whether Adria Lopez should implement the proposed changes. Explain