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Santana Rey expects second-quarter 2018 sales of her new 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 $1,260) and 21 chairs (sales price of $510). BUSINESS SOLUTIONS-Computer Furniture Segment Segment Income Statement For Quarter Ended March 31, 2018 Sales $187,110 Cost of goods sola 140,160 Gross profit 46,950 Expenses Sales commissions (108) 18,711 Advertising expenses 9,300 Other fixed expenses 18,300 Total expenses 46,311 Net income 639 Reflects revenue and expense activity only related to the computer furniture segment. Revenue: (123 desks * $1,260) + (63 chairs * $510) = $154,980 + $32,130 = $187,110 # Cost of goods sold: (123 desks * $760) + (63 chairs * $260) + $30,300 = $140,160 Santana Rey believes that sales will increase each month for the next three months (April, 49 desks, 33 chairs; May, 53 desks, 36 chairs: June, 57 desks, 39 chairs) if selling prices are reduced to $1,160 for desks and $460 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 $760 for desks and $260 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,100 and other fixed expenses will remain at $6,100 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. 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. Answer is complete but not entirely correct. June BUSINESS SOLUTIONS-COMPUTER FURNITURE SEGMENT Budgeted Income Statements For Months of April, May, and June April May Sales $ 72,020 $ 78,040 Cost of goods sold 45,820 49,640 Gross profit 26,200 28,400 Expenses Sales commissions 7,202 7,804 Advertising 3,100 3,100 Other fixed expenses 6,100 6,100 Total expenses 16,402 17,004 Net income (loss) $ 9,798 $ 11,396 $ 84,060 53,460 30,600 8,406 3,100 6,100 17,606 $ 12,994 2. Recommend whether Santana Rey should implement the proposed changes. Should implement the proposed changes Should not implement the proposed changes Prey 1 of 1 Next