Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help!! thank you!! Santana Rey expects second-quarter 2020 sales of Business Solutions's line of computer furniture to be the same as the first quarter's

please help!! thank you!!

image text in transcribedimage text in transcribedimage text in transcribed Santana Rey expects second-quarter 2020 sales of Business Solutions's line of computer furniture to be the same as the first quarter's sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,220 ) and 17 chairs (sales price of $470 ). * Reflects revenue and expense activity only related to the computer furniture segment. Revenue: (120 desks $1,220)+(51 chairs $470)=$146,400+$23,970=$170,370 Cost of goods sold: (120 desks $720)+(51 chairs $220)+$29,100=$126,720 Santana Rey believes that sales will increase each month for the next three months (April, 48 desks, 29 chairs; May, 52 desks, 32 chairs; June, 56 desks, 35 chairs) if selling prices are reduced to $1,100 for desks and $420 for chairs and advertising expenses are increased by 10% and remain at that level for all three months. The products' variable cost will remain at $720 for desks and $220 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $9,700 and other fixed expenses will remain at $5,700 per month. Required: 1. Prepare budgeted income statements for the computer furniture segment for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month. 2. Recommend whether Santana should implement the proposed changes. Hint. Compare quarterly income for the proposed AprilMay-June period to the quarterly income for the January-February-March period. Recommend whether Santana Rey should implement the proposed changes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Kin Lo, George Fisher

4th Edition

0135220491, 9780135220498

More Books

Students also viewed these Accounting questions