Question Help P22-55B (similar to) Ivey Company prepared the following budgeted income statement for the first quarter of 2018: Click the icon to view the budgeted income statement) Ivey Company is considering two options (Click the icon to view the options) Read the requirements Requirement 1. Prepare budgeted income statements for both options, assuming both options begin in January and January sales remain $25,000. Round all calculations to the nearest dollar Begin by preparing the budgeted income statement for Option 1. Ivey Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January $ 25,000 5,000 Sales Revenue Cost of Goods Sold on nnn ter 1 Data Table Ivey Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January February March Net Sales Revenue (20% increase per month) 5 25,000 $ 30,000 $ 36,000 $ Cost of Goods Sold (20% of sales) 5,000 6,000 7,200 Gross Profit 20,000 24,000 28,800 S and A Expenses (53,000 + 12% of sales) 6,000 6,600 7,320 Operating Income 14,000 17.400 21,480 Income Tax Expense (20% of operating income) 2,800 3,480 -4,296 Net Income $ 11,200 $ 13,920 $ 17,184 $ Total 91,000 18,200 72,800 19,920 52.880 10,576 42,304 Print Done 7 of 8 (1 complete) Score: 0 of 1 pt P22-55B (similar to) Ivey Company prepared the following budgeted income statement for the first quarter of 2018 (Click the icon to view the budgeted income statement) Ivey Company is considering two options (Click the icon to view the options.) Read the requirements Ivey Company Budgeted Income Statement For the Quarter Ended March 31, 2018 January $ 25,000 5,000 0 Requirements - X Sales Revenue Cost of Goods Sold Gross Profit S and A Expenses Operating Income Income Tax Expense 20.000 6000 1. Prepare budgeted income statements for both options, assuming both options begin in January and January sales remain $25,000. Round all calculations to the nearest dollar 2. Which option should Ivey choose? Explain your reasoning 14000 2800 Net Income 11200 Print Done Enter any number in the edit fields and then click Check Answer & Parts O remaining Clear All otion 1 - X * More Info 2018 Option 1 is to increase advertising by $1,200 per month. Option 2 is to use better-quality materials in the manufacturing process. The better materials will increase the cost of goods sold to 25% but will provide a better product at the same sales price. The marketing manager projects either option will result in sales increases of 25% per month rather than 20%. Print Done
