Merline Manufacturing makes its product for $75 per unit and sells it for $139 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, 2017

Sales	$1,390,000
Cost of goods sold	750,000
Gross profit	640,000
Operating expenses
Sales commissions (10%)	139,000
Advertising	218,000
Store rent	24,900
Administrative salaries	44,500
DepreciationOffice equipment	54,500
Other expenses	12,900
Total expenses	493,800
Net income	$ 146,200

Management expects December's results to be repeated in January, February, and March of 2018 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 $124 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 $75 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same.

Prepare budgeted income statements for each of the months of January, February, and March that show the expected results fror Implementing the proposed changes. MERLINE MANUFACTURING Budgeted Sales For Months of January, February, and March, 2018 January February March Budgeted sales in dollars) MERLINE MANUFACTURING Budgeted Income Statement For Months of January, February, and March, 2018 January February March Fynanses For Months of January, February, and March, 2018 January February March Expenses Sales commissions Advertising Store rent Administrative salaries Depreciation-Office equipment Other expenses Total expenses