Kling Company prepared the following budgeted income statement for the first quarter of 2018: (Click the icon to view the budgeted income statement.) Kling Company is considering two options. (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 $10,000. Round all calculations to the nearest dollar. Begin by preparing the budgeted income statement for Option 1. * Kling Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Data Table - X Total A More Info Sales Revenue Cost of Goods Sold Gross Profit S and A Expenses Operating Income Income Tax Expense 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 55% 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%. Kling Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February Net Sales Revenue (20% increase per month) $ 10,000 $ 12,000 $ Cost of Goods Sold (50% of sales) 5,000 6,000 Gross Profit 5,000 6,000 S and A Expenses ($3,000 + 5% of sales) 3,500 3,600 Operating Income 1,500 2,400 Income Tax Expense (30% of operating income) 450 720 Net Income 1,050 $ 1,680 $ March 14,400 $ 7,200 7,200 3,720 Total 36,400 18,200 18,200 10,820 7,380 Net Income Now prepare the budgeted income statement for Option 2. (Round all amounts to the ne Print Done 3,480 1,044 2,436 $ 2.214 5,166 Kling Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Total Print Done Sales Revenue Cost of Goods Sold Enter any number in the edit fields and then continue to the next question. Save for Later Kling Company prepared the following budgeted income statement for the first quarter of 2018: (Click the icon to view the budgeted income statement.) Kling Company is considering two options. (Click the icon to view the options.) Read the requirements. Gross Profit S and A Expenses Operating Income Income Tax Expense i X - Data Table Net Income Now prepare the budgeted income statement for Option 2. (Round all amounts to the nearest whole number.) - X * More Info Kling Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Total Sales Revenue 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 55% 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%. Total 36,400 18.200 Kling Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February Net Sales Revenue (20% increase per month) $ 10,000 $ 12,000 $ Cost of Goods Sold (50% of sales) 5.000 6.000 Gross Profit 5,000 6,000 S and A Expenses ($3,000 + 5% of sales) 3,500 3,600 Operating Income 1,500 2,400 Income Tax Expense (30% of operating income) C 450 720 $ 1,050 $ 1,680 $ Net Income Cost of Goods Sold Gross Profit S and A Expenses Operating Income Income Tax Expense March 14,400 $ 7.200 7,200 3,720 3,480 1,044 2,436 $ Print Done 18,200 10,820 7,380 2,214 5,166 Net Income Requirement 2. Which option should Kling choose? Explain your reasoning. Print Done 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 expect Enter any number in the edit fields and then continue to the next