Below is the question I need help with, in the first box the options are: option 1, option 2. In the second box it's yield higher or lower. In the third box it's option 1, 2 or neither.
Ivey Company prepared the following budgeted income statement for the first quarter of 2018: Ivey Company is considering two options. (Click the icon to view the budgeted income statement.) i (Click the icon to view the options.) Read the requirements Requirement 1. Prepare budgeted income statements for both options, assuming both options begin in January and January sales remain $8,000. Round all calculations to the nearest dollar. i Requirements - X Begin by preparing the budgeted income statement for Option 1 Ivey Company 1. Prepare budgeted income statements for both options, assuming both options Budgeted Income Statement Data Table begin in January and January sales remain $8,000. Round all calculations to the nearest dollar. For the Quarter Ended March 31, 2018 2. Which option should Ivey choose? Explain your reasoning. January February March Total Sales Revenue Ivey Company Print Done Cost of Goods Sold Budgeted Income Statement Gross Profit For the Quarter Ended March 31, 2018 S and A Expenses January February March Total Operating Income Net Sales Revenue (20% increase per month) $ 8,000 $ 9,600 $ 11,520 $ 29, 120 Cost of Goods Sold (40% of sales) 3.200 3.840 4.608 11,648 Income Tax Expense Gross Profit 4,800 5,760 6,912 17,472 Net Income S and A Expenses ($2,000 + 10% of sales) 2,800 2.960 3,152 8,912 Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) Operating Income 2,000 2,800 3,760 8,560 Ivey Company Income Tax Expense (30% of operating income) 600 840 1.128 2,568 Budgeted Income Statement Net Income $ 1,400 $ 1,960 $ 2,632 $ 5,992 For the Quarter Ended March 31, 2018 January February March Total Print Done Sales Revenue Cost of Goods Sold Gross ProfitIvey Company prepared the following budgeted income statement for the first quarter of 2018: Ivey Company is considering two options. (Click the icon to view the budgeted income statement.) i (Click the icon to view the options.) Read the requirements. Sales Revenue Requirements - X Cost of Goods Sold Gross Profit S and A Expenses 1. Prepare budgeted income statements for both options, assuming both options Operating Income i Data Table begin in January and January sales remain $8,000. Round all calculations to the nearest dollar. Income Tax Expense 2. Which option should Ivey choose? Explain your reasoning Net Income Ivey Company Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) Print Done Budgeted Income Statement Ivey Company For the Quarter Ended March 31, 2018 Budgeted Income Statement January February March Total For the Quarter Ended March 31, 2018 Net Sales Revenue (20% increase per month) $ 8,000 $ 9,600 $ 11,520 $ 29,120 January February March Total Cost of Goods Sold (40% of sales) 3.200 3.840 4,608 11,648 Sales Revenue Gross Profit 4,800 5,760 6,912 17,472 Cost of Goods Sold S and A Expenses ($2,000 + 10% of sales) 2,800 2,960 3,152 8,912 Gross Profit Operating Income 2,000 2,800 3,760 8,560 S and A Expenses Income Tax Expense (30% of operating income) 600 840 1,128 2.568 Operating Income Net Income $ 1,400 $ 1,960 $ 2,632 $ 5,992 Income Tax Expense Net Income Print Done Requirement 2. Which option should Ivey 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 $5,992 currently budgeted, Ivey may decide
