Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
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 44 desk units (sales price of $1,310 ) and 26 chairs (sales price of $560 ). - Reflects revenue and expense activity only related to the computer furniture segment. Revenue: (132 desks $1,310)+(78 chairs $560)=$172,920+$43,680=$216,600 Cost of goods sold: (132 desks $810)+(78 chairs $310)+$31,800=$162,900 Santana Rey believes that sales will increase each month for the next three months (April, 52 desks, 38 chairs; May, 56 desks, 41 chairs; June, 60 desks, 44 chairs) if selling prices are reduced to $1,210 for desks and $510 for chairs and advertising expenses are increased by 10% and remain at that level for all three months. The products' variable cost will remain at $810 for desks and $310 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,600 and other fixed expenses will remain at $6,600 per month. Required: 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 ApritMay-June period to the quarterly income for the January-February-March period. Required: 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 period to the quarterly income for the January-February-March period. Complete this question by entering your answers in the tabs below. 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. (Negative balances and should be indicated with minus sign.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting in an Economic Context

Authors: Jamie Pratt

8th Edition

9781118139424, 9781118139431, 470635290, 1118139429, 1118139437, 978-0470635292

More Books

Students also viewed these Accounting questions