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Santana Rey expects second-quarter 2020 sales of Business Solutions's line of computer furniture to be the same as the first quarter's sales (reported below) without
Santana Rey expects second-quarter 2020 sales of Business Solutions's line of computer furniture to be the same as the first quarter's sales (reported below) without any changes in strategy. Monthly sales averaged 41 desk units (sales price of $1,240 ) and 19 chairs (sales price of $490 ). * Reflects revenue and expense actlvity only related to the computer furniture segment. Revenue: (123 desks $1,240)+(57 chalrs $490)=$152,520+$27,930=$180,450 Cost of goods sold: (123 desks $740)+(57 chairs $240)+$29,700=$134,400 Santana Rey belleves that sales will Increase each month for the next three months (Aprll, 49 desks, 31 chalrs; May, 53 desks, 34 chairs; June, 57 desks, 37 chalrs) If selling prices are reduced to $1,130 for desks and $440 for chalrs and advertising expenses are Increased by 10% and remain at that level for all three months. The products' varlable cost will remain at $740 for desks and $240 for chalrs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $9,900 and other fixed expenses will remain at $5,900 per month. Requlred: 1. Prepare budgeted Income statements for the computer furniture segment for each of the months of April, May, and June that show the expected results from Implementing the proposed changes. Use a three-column format, with one column for each month. 2. Recommend whether Santana should Implement the proposed changes. Hint. Compare quarterly Income for the proposed AprilMay-June perlod to the quarterly Income for the January-February-March perlod. Prepare budgeted income statements for the computer furniture segment for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each manth (Mnnatiun halanmon and ahnuld ha indimatad with minus oinn )
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