Problem 22-3A (Algo) Manufacturing: Preparation and analysis of budgeted Income statements LO P3 Merline Manufacturing makes...

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Problem 22-3A (Algo) Manufacturing: Preparation and analysis of budgeted Income statements LO P3 Merline Manufacturing makes its product for $60 per unit and sells it for $136 per unit. The sales staff receives a commission of 10% of sales. Its December income statement follows. Sales Cost of goods sold Gross profit MERLINE MANUFACTURING Income Statement For Month Ended December 31 Selling, general, and administrative expenses Sales commissions (18%) Advertising Office rent Administrative salaries Depreciation-Office equipment Office Insurance Net income $1,360,000 600,000 760,000 136,000 212,000 24,600 43,000 53,000 12,600 481,200 $278,800 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 $121 per unit and advertising is increased to $233,200 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 $60 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. 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 Problem 22-3A (Algo) Manufacturing: Preparation and analysis of budgeted Income statements LO P3 Merline Manufacturing makes its product for $60 per unit and sells it for $136 per unit. The sales staff receives a commission of 10% of sales. Its December income statement follows. Sales Cost of goods sold Gross profit MERLINE MANUFACTURING Income Statement For Month Ended December 31 Selling, general, and administrative expenses Sales commissions (18%) Advertising Office rent Administrative salaries Depreciation-Office equipment Office Insurance Net income $1,360,000 600,000 760,000 136,000 212,000 24,600 43,000 53,000 12,600 481,200 $278,800 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 $121 per unit and advertising is increased to $233,200 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 $60 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. 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