the following financial statement from Bok Traders who manufacture replica rugby jerseys. The managing director, Mr Erasmus, has asked for assistance to determine whether the marketing manager's proposal is a viable option in helping to boost the company's revenue. In the current financial year 40 000 jerseys were sold, which was 60 000 jerseys less than what was sold previously

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2021

DETAILS R

Sales 8 800 00

Cost of Sales ( 4 500 000)

Gross Profit 4 300 000

Other operating income. 1 200 000

Gross operating income 5 500 000

Operating Expenses (3 400 000)

Operating profit 2 100 000

Interest income 195 000

Profit before interest expenses 2 295 000

Interest expense (475 000)

Profit before tax 1 820 000

The marketing team, through their research, has indicated that if the selling price was reduced by 25%, then unit sales would increase by 60% for the next financial year.

Together with the marketing department's research, the financial manager has provided with the following forecasted information for the year ending 31 March 2022.

Through negotiation with suppliers and the improved exchange rate, the costs to manufacture each jersey are expected to decrease by 10%.

Other operating income is expected to increase by 5%.

Operating expenses are expected to increase by 12%.

Due to the decline in interest rates, interest income is expected to be three quarters of the

amount earned for the year ending 31 March 2021 whilst the interest expense is expected to decline by R 50 000.

Mr Erasmus has indicated that the proposal will only be implemented if the forecasted net profit before tax percentage exceeds the industry average of 15%.

REQUIRED:

Prepare the budgeted statement of comprehensive income using the information above to determine whether the marketing manager's proposal should be implemented.