Richardson Corporation reported the following year-end information for 2018:

Sales (200,000) $500,000

Less: Cost of goods sold 300,000

Gross profit 200,000

Operating expenses

(Includes $20,000 of depreciation) 120,000

Operating income $ 80,000

Richardson is developing the budget for 2019.In 2019, the company would like to increase selling prices by 15 percent; and as a result, the company expects a decrease in sales volume of 10 percent.Richardson is looking to use the kaizen approach to budgeting in 2019.Under the kaizen approach, cost of goods sold and variable operating expenses would be budgeted to decline by three percent without considering any changes in sales.Other than depreciation, all operating costs are variable.

Required:

a) provide budgeted income statement for 2019.

b) Should Richardson change the selling price and implement kaizen budgeting? Explain.