Income Tax Expense Net Income Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 Sales Revenue Cost of Goods Sold Gross Profit S and A Expenses Operating Income January February 15000 March Total Income Tax Expense Net Income Requirement 2. Which option should Gambrell choose? Explain your reasoning. If one of the two options is chosen, it would be Gambrell may decide 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 $7,824 currently budgeted, Gambrell Company prepared the following budgeted income statement for the first quarter of 2018: (Click the icon to view the budgeted income statement.) Gam a More info Read Requirement 1. Prepare budgeted income statements for both options, assuming both options begin in January and January sales remain $15,000. Begin by preparing the budgeted income statement for Option 1. Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 Data table Option 1 is to increase advertising by $1,500 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%. Print Done Sales Revenue Cost of Goods Sold Gross Profit S and A Expenses Operating Income January 15000 February March Total Income Tax Expense Net Income Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) Gambrell Company Budgeted Income Statement For the Quarter Ended March 31, 2018 Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Total Net Sales Revenue (20% increase per month) Cost of Goods Sold (60% of sales) Gross Profit $ 15,000 $ 18,000 $ 21,600 $ 54,600 9,000 10,800 12,960 32,760 6,000 7,200 8,640 21,840 S and A Expenses ($2,200 + 10% of sales) Operating Income 3,700 4,000 4,360 12,060 2,300 3,200 4,280 9,780 Income Tax Expense (20% of operating income) 460 640 856 1,956 $ 1,840 $ 2,560 $ 3,424 $ 7,824 Net Income