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Merline Manufacturing makes ts product for s60 unt and sels it sor s140 per The sales staff receives a 10% commission on the sale of
Merline Manufacturing makes ts product for s60 unt and sels it sor s140 per The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows. For Month Ended December 31, 2015 Cost of goods sold Gross profit Operating expenses Sales commissions (10%) 140,000 220.000 Store rent 25.000 Administrative salaries 45,000 55.000 13.000 Total expenses 408,000 Net income 402,000 Management expects Deoember's results to be repeated in January, February, and March of 2016 without in strategy. Management, however, has an alternative plan. believes that unt sales wll any changes at a rate of 10% each month for the next three months (beginning with January) ifthe tem's selling reduced to s125 per unit and advertising expenses are increased by 25% and remain at that level for al three months. The cost of its product waremain at S50 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, Febnuary, and Maroh that show the expected results from implementing the proposed changes. MERUNE MANUFACTURING Budgeted sales For Months of January February, and March, 2016
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