Problem 20-3A Manufacturing: Preparation and analysis of budgeted income statements LO P3 Merline Manufacturing makes its product for $65 per unit and sells it for $137 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 $1,370,000 Cost of goods sold 650,000 Gross profit 720,000 Operating expenses Sales commissions (10%) 137,000 Advertising 214,000 Store rent 24,700 Administrative salaries 43,500 Depreciation-office equipment 53,500 Other expenses 12,700 Total expenses 485,400 Net income S $ 234,600 es 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 iter's selling price is reduced to $122 per unit and advertising expenses are increased by 15% 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: 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, 2018 January February March Budgeted sales (in dollars) MERLINE MANUFACTURING Budgeted Income Statement 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 0 0 0 $ 0 0 S 0 $