CL Corporation appears to be experiencing a good year, with sales in the first quarter of 20B one third ahead of last year's sales. The Sales Department predicts continuation of this rate throughout the year. The controller has been asked to prepare a new forecast for the year and to analyze the differences from 20A results. The forecast is to be based on actual results obtained in the first quarter plus estimates for the remainder of the year. Department heads have provided the necessary information, which is summarized in the following prospective trial balance:

Adjustments for the change in inventory and for income tax have not been made. The scheduled production for 20B is 450 million units; sales volume will reach 400 million units. Sales and production volume in 20A was 300 million units. A full-cost, first in, first out inventory system is used. The company is subject to a 40% income tax rate. The actual financial statements for 20A follow:
Required:
(1) Prepare prospective financial statements for 20B-a statement of income and retained earnings, and a balance sheet.
(2) Using the 20A information for comparison:
(a) Evaluate the 20B prospective profit performance.
(b) Specify areas of 20B operating performance to be investigated.
(c) Recommend programs for improved management performance.

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CL Corporation Prospective Trial Balance December 31, 20B (in thousands) 1,200 80,000 48,000 130,000 Cash Inventory (1/1/20B, 40,000 units).. Plant and Equipment.. Accumulated Depreciation. Accounts Payable Accrued Payables Notes Payable (due within one year Common Stock S 41,000 45,000 23,250 50,000 70,000 108,200 600,000 9,000 Retained Earnings Sales Manufacturing costs: ...unenre 213,000 218,000 130,000 5,000 7,750 Materials.. Depreciation... Other Fixed Factory Overhead.. Salaries.. Promotion and Advertising Marketing 16,000 20,000 45,000 General and administrative: 16,000 2,500 9,000 ncome lax Dividends... 5,000 $946.450 946,450 CL Corporation Balance Sheet December 31, 20A (in thousands) Assets Current assets: Cash Accounts 23,000 50,000 48,000 12,00 Plant and equipment $130,000 94.000 215,000 Less accumulated depreciation Total assets Liabilities and Shareholders' Equi Current liabilities Accounts payable Accrued payables Notes payable S 13,000 12,800 11000 36,800 Shareholders' equity $ 70,000 Common stock Retained earnings Total liabilities and shareholders' equity ... $215,000 CL Corporation Statement of Income and Retained Earnings For Year Ending December 31,20A (in thousands) $450,000 Other income 15000 $465,000 …艹 Cost of goods manufactured and sold: Direct labor Variable factory overhead Fixed factory overhead Materials ...$132.000 135,000 81,000 .. $360,000 48,000 $409,000 Beginning inventory Ending inventory Salaries 48,000 $360,000 Marketing S 13,500 15,000 60,000 General and administrative 14,000 2,000 Tr 24,000 452. 400 Income tax Net income 12,600 100,600 $113,200 Less dividends Ending retained earnings 08.200