Merline Manufacturing makes its product for $50 per unit and sells it for $146 per unit. The sales staff receives a commission of 10% of sales. Its December income statement follows.

MERLINE MANUFACTURING
Income Statement
For Month Ended December 31
Sales		$ 1,460,000
Cost of goods sold		500,000
Gross profit		960,000
Selling, general, and administrative expenses
Sales commissions (10%)	$ 146,000
Advertising	232,000
Office rent	25,600
Administrative salaries	48,000
DepreciationOffice equipment	58,000
Office Insurance	13,600	523,200
Net income		$ 436,800

Management expects Decembers 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 $131 per unit and advertising is increased to $255,200 per month, sales units will be 11,000 for January, 12,100 for February, and 13,310 for March. 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 results from implementing the proposed plan. 2. For the proposed plan, is income in March budgeted to be higher than income in December?

Budgeted Sales \begin{tabular}{|l|c|c|c|c|} \hline & January & February & March \\ \hline \hline & & & & \\ \hline Budgeted sales (in dollars) & & & \\ \hline \hline \end{tabular} For the proposed plan, is income in March budgeted to be higher than income in December? Eor the proposed plan, is income in March budgeted to be higher than income in December