Gambrell Company prepared the following budgeted income statement for the first quarter of $2024$:

Requirements

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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.

Which option should Gambrell choose? Explain your reasoning.

Option $1$ is to increase advertising by $$700$ 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 $25\%$ per month rather than $20\%.$