Management expects December's results to be repeated in January, February, and March without any changes in strategy.

Management, however, has an alternative plan. It believes that if the unit selling price is reduced to $$125$ per unit and advertising

is increased to $$287,500$ per month, sales units will be $16,500$ for January, $18,150$ for February, and $19,965$ for March. The cost of its

product will remain at $$75$ per unit, the sales staff will continue to earn a $10\%$ commission, and the remaining expenses will stay the same.

Required

Prepare budgeted income statements for each of the months of January, February, and March that show results from implementing the

proposed plan. Use a three$-$column format, with one column for each month. Ignore income taxes.

Analysis Component

For the proposed plan, is income in March budgeted to be higher than income in December?