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

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 42 desk units (sales price of $1,280) and 23 chairs (sales price of $530). BUSINESS SOLUTIONS-Computer Furniture Segment Segment Income Statement* For Quarter Ended March 31, 2020 Sales" $ 197,850 Cost of goods sold 148,500 Gross profit 49,350 Expenses Sales commissions (10%) 19,785 Advertising expenses 9,900 Other fixed expenses 18,900 Total expenses 48,585 Net income $ 765 * Reflects revenue and expense activity only related to the computer furniture segment. f Revenue: (126 desks * $1,280) + (69 chairs * $530) = $161,280 + $36,570 = $197,850 Cost of goods sold: (126 desks * $780) + (69 chairs * $280) + $30,900 = $148,500 Santana Rey believes that sales will increase each month for the next three months (April, 50 desks, 35 chairs; May, 54 desks, 38 chairs; June, 58 desks, 41 chairs) if selling prices are reduced to $1,180 for desks and $480 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 $780 for desks and $280 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,300 and other fixed expenses will remain at $6,300 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 Rey should implement the proposed changes

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

Database Security And Auditing Protecting Data Integrity And Accessibility

Authors: Hassan A. Afyouni

1st Edition

0619215593, 9780619215590

More Books

Students also viewed these Accounting questions

Question

Map a set of problem domain objects to an RDBMS format.

Answered: 1 week ago