merline manufacturing makes its product for $60 per unit and sells it for $148 per unit. the sales staff receives a 10% commission on the sale of each unit. its december income statement follows

Problem 20-3A Manufacturing: Preparation and analysis of budgeted income statements LO P3 Merline Manufacturing makes its product for $60 per unit and sells it for $148 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows. MERLINE MANUFACTURING Income Statement For Month Ended December 31, 2019 Sales $1,480,000 Cost of goods sold 600,000 Gross profit 880,000 Operating expenses Sales commissions (108) 148,000 Advertising 236,000 Store rent 25,800 Administrative salaries 49,000 Depreciation office equipment 59,000 Other expenses 13,800 Total expenses 531,600 Net income $ 348,400 Management expects December's results to be repeated in January, February, and March of 2020 without any changes in strategy Management, however, has an alternative plan. It believes that unit sales will 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 $133 per unit and advertising expenses are increased by 20% and remain at that level for all three months. The cost of its product will remain at $60 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. 2. Is net income for March expected to increase with the proposed strategy changes? Required 1 Required 2 Prepare budgeted income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes. (Enter your final answers in whole dollars.) MERLINE MANUFACTURING Budgeted Sales For Months of January, February, and March, 2020 January February Budgeted sales (in units) Budgeted selling price per unit $ 133 Budgeted sales (in dollars) March MERLINE MANUFACTURING Budgeted Income Statement For Months of January, February, and March, 2020 January February March Sales Cost of goods sold (Gross profit Expenses Sales commissions Advertising Store rent Administrative salaries Depreciation Office oquipment Other expenses Total expenses Not incomo 236,000 25,800 49,000 59,000 236,000 25,800 49,000 59,000 236,000 25,800 49,000 59,000 369,800 369,800 369,800 S (369,800) S(369,600) S (369,800) Management expects December's results to be repeated in January, February, and March of 2020 without any changes in strategy. Management, however, has an alternative plan. It believes that unit sales will 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 $133 per unit and advertising expenses are increased by 20% and remain at that level for all three months. The cost of its product will remain at $60 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. 2. Is net income for March expected to increase with the proposed strategy changes? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Is net income for March expected to increase with the proposed strategy changes? Is net income for March expected to increase with the proposed strategy changes?