Lilliput, a one-product mail-order firm, buys its product for $50 per unit and sells it for $146 per unit The sales staff receives a 10% commission on the sale of each unit its December income statement follows LILLIPUT COMPANY Income Statement For The Month Ended December 31, 2011 Sales Cost of goods sold $1,460,000 500,000 Gross profit Expenses 960,000 Sales commissions (10%) Advertising Store rent Administrative salaries Depreciation Other expenses 146,000 232,000 25,600 48,000 58,000 13,600 Total expenses 523,200 Net profit S 436,800 Management expects December's results to be repeated in January, February, and March of 2012 without any changes in strategy. Management, however, has an alternative plan It believes that unit sales wll increase at a rate of 10% each month for the next three months (beginning with January) if the item's selling price is reduced to $131 per unit and advertising expenses are increased by 10% and remain at that level for all three months. The cost of its product will remain at $50 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same. Required: 1. Prepare budgeted income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes (Input all amounts as positive values. Omit the "$" sign in your response.) LILLIPUT COMPANY Budgeted Income Statement For Months of January, February, and March March Sales Cost of goods sold Gross profit 10% commission, and the remaining expenses will stay the same Required 1. Prepare budgeted income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes. (Input all amounts as positive values Omit the "$" sign in your response.) LILLIPUT COMPANY Budgeted Income Statement For Months of January, February, and March Janu March Sales Cost of goods sold Gross profit Expenses Sales commissions Advertising Store rent Administrative salaries Depreciation Other expenses Total expenses Net profit References Worksheet Leaming Objective: 23-C2 Describe a master budget and the process of preparing it. Difficulty: 2 Medium Learning Objective: 23-P2 Link both operating and capital expenditures budgets to budgeted