Answered step by step
Verified Expert Solution
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
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 activity only related to the computer furniture segment. Revenue: (123 desks $1,240)+(57 chairs $490)=$152,520+$27,930=$180,450 $ Cost of goods sold: (123 desks $740)+(57 chairs $240)+$29,700=$134,400 Santana Rey believes that sales will increase each month for the next three months (April, 49 desks, 31 chairs; May, 53 desks, 34 chairs; June, 57 desks, 37 chairs) if selling prices are reduced to $1,130 for desks and $440 for chairs and advertising expenses are Reflects revenue and expense activity only related to the computer furniture segment. Revenue: (123 desks $1,240)+(57 chairs $490)=$152,520+$27,930=$180,450 Cost of goods sold: (123 desks $740)+(57 chairs $240)+$29,700=$134,400 Santana Rey believes that sales will increase each month for the next three months (April, 49 desks, 31 chairs; May, 53 desks, 34 chairs; June, 57 desks, 37 chairs) if selling prices are reduced to $1,130 for desks and $440 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 $740 for desks and $240 for chairs. 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. 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 Jun show the expected results from implementing the proposed changes. Use a three-column format, with one column for month. (Negative balances and should be indicated with minus sign.) Complete this question by entering your answers in the tabs below. Recommend whether Santana Rey should implement the proposed changes. Recommend whether Santana Rey should implement the proposed changes
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started