The general manager of Ulysses Hardware Manufacturing Company has asked the controller to prepare an income forecast for the next year, by quarters, with sales reported for each of the two major segments-commercial and government. The Marketing Department provided the following sales estimates:

The controller's office assembled the following figures:
(a) Cost of goods sold: 46% of total sales.
(b) Advertising expenditures: $6,000 each quarter.
(c) Selling expenses: 10% of total sales.
(d) Administrative expenses: 16.8% of gross profit.
(e) General office expenses: 12% of gross profit.
(f) Corporate income tax rate: 40%
Required:
(1) Prepare a budgeted income statement, by quarters and in total. All figures should be shown in thousands of dollars and rounded to the nearest thousand. Add the four quarters across to obtain total figures.
(2) Prepare an analysis of the effect of a 5% increase in commercial sales revenue, using the same income statement format as for requirement 1.

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1st Quarter 2d Quarter 3d Quarter 4th Quarter Commercial sales..$250,000 Government sales.... 100,000 120,000 110,000 115,000