Avery Company prepared the following budgeted income statement for the first Avery Company is considering two options, quarter of 2018 (Click the icon to view the options.) (Click the icon to view the budgeted income statement.) 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. Avery Company Budgeted Income Statement For the Quarter Ended March 31, 2018 to 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.) Avery 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 Avery choose? Explain your reasoning. If one of the two options is chosen, it would be 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 currently budgeted Avery may decide Requirement 2. Which option should Avery choose? Explain your reasoning. If one of the two options is chosen, it would be because net income for the quarter is expected to be higher under this option. However, because both options are expected to yield net ter than the $20.268 currently budgeted, Avery may decide Option 1 Option 2 Enter any number in the edit fields and then continue to the next question Requirement 2. Which option should Avery choose? Explain your reasoning If one of the two options is chosen, it would be 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 currently budgeted, Avery may decide Enter any number in the edit field higher lower tinue to the next question Income Tax Expense not to choose either of the options. to choose Option 1 to choose Option 2 thoose? Explain your reasoning because net income for the quarter is expected to be higher under this option. However, because et income for the quarter than the $20,268 currently budgeted, Avery may decide re Data Table - X March Total Avery 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 36,000 $ 21,600 14,400 5,080 9,320 932 8,388 $ 91,000 54,600 36,400 13,880 22,520 2.252 20,268 Print Done ary February March Total More Info - X Option 1 is to increase advertising by $1,400 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 30% per month rather than 20%. m Print Done geted Income Statement Quarter Ended March 31, 2018 iary February March Total
