Problem 22-3A (Algo) Manufacturing: Preparation and analysis of budgeted income statements LO P3 Merline Manufacturing makes its product for $65 per unit and sells it for $143 per unit. The sales staff receives a commission of 10% of sales. Its December income statement follows. HERLINE MANUFACTURING Income Statement For Month Ended December 31 - Sales $ 1,430,000 Cost of goods sold Gross profit 650,000 780,000 Selling, general, and administrative expenses Sales commissions (10%) 143,000 Advertising 226,000 office rent 25,300 Administrative salaries 46,500 Depreciation Office equipment 56,500 13,300 $10,600 Office Insurance Net income $ 269,400 Management expects December's results to be repeated in January, February, and March without any changes in strategy. Management, however, has an alternative plan. It believes that if the unit selling price is reduced to $128 per unit and advertising is increased to $271,200 per month, sales units will be 11,000 for January, 12,100 for February, and 13,310 for March. 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: 1. Prepare budgeted income statements for each of the months of January, February, and March that show results from implementing the proposed plan. 2. For the proposed plan, is income in March budgeted to be higher than income in December? Complete this question by entering your answers in the tabs below. ces Required 1 Required 2 Prepare budgeted income statements for each of the months of January, February, and March that show results from implementing the proposed plan. (Enter your final answers in whole dollars.) MERLINE MANUFACTURING Budgeted Sales January February March Budgeted sales (in dollars) MERLINE MANUFACTURING Budgeted Income Statement January February March Selling general, and admin. expenses Sales commissions Advertising Office rent Administrative salaries Depreciation Office equipment Office insurance Total expenses Complete this question by entering your answers in the tabs below. Required 1 Required 2 For the proposed plan, is income in March budgeted to be higher than income in December? For the proposed plan, is income in March budgeted to be higher than income in December