Merline Manufacturing makes its product for $65 per unit and sells it for $149 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 $1,490,000 650,000 840,000 Sales Cost of goods sold Gross profit Operating expenses Sales commissions 149,000 (108) Advertising 238,000 25,900 Store rent Administrative 49,500 salaries Depreciation-Office equipment Other expenses Total expenses 59,500 13,900 535,800 $ 304,200 Net income 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 $134 per unit and advertising expenses are increased by 25% and remain at that level for all three months. The cost of its product will remain at $65 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. 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 Required 1 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 March January February Budgeted sales (in dollars) MERLINE MANUFACTURING Budgeted Income Statement For Months of January, February, and March, 2020 January February March Expenses Sales commissions Advertising Store rent Administrative salaries Depreciation-Office equipment Other expenses Total expenses Required 1 Required 2 Merline Manufacturing makes its product for $65 per unit and sells it for $149 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 $1,490,000 650,000 840,000 Sales Cost of goods sold Gross profit Operating expenses Sales commissions 149,000 (108) Advertising 238,000 25,900 Store rent Administrative salaries 49,500 Depreciation-Office equipment Other expenses 59,500 13,900 Total expenses 535,800 304,200 $ Net income 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 $134 per unit and advertising expenses are increased by 25% and remain at that level for all three months. The cost of its product will remain at $65 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 Required 1 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? Required 1 Required 2