PZ2- 43 A. Using sensitivity analysis Sova Company prepared the following budgeted income statement for the first quarter* of 2016 : SOYA COMPANY Budgeted Income Statement For the Quarter Ended March 31 , 2016 January February March Total Sales REVENUE 120%'6 increase per month ! ` B.OOO $ 5, 500 $ 11, 520 $ 29, 120 Cost of Goods Sold 140%'6 of sales! 3, 2010 3, 840 4, 508 1 1 , 54B Gross Profit 4, 800 5, TED 5, 512 17, 472 SEA EXPENSES 152,000 + 10%' of sales! 2. 8:010 2.9 ED 3 . 152 3.512 Operating Income* 2,000 8.5 50 INCOME Tax EXPENSE 13036 Of operating income*! 1 . 128 2. 5 EB NET Income 5 1, 400 $ 1, 950 5. 2, 532| $ 5, 592 Sara Company is considering two options . Option I is to increase advertising by $1, 2010 per month . Option ? is to use better-quality materials in the manufacturing* process . The better materials will increase the cost of goods sold to $15%' 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%/0 . Requirements 1 . Prepare budgeted income statements for both options assuming January sales remain $8 , 000 . Round all calculations to the nearest dollar . 2. Which option should Saya choose ? Explain your reasoning*