Merline Manufacturing makes its product for $70 per unit and sells it for $144 per unit....
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Merline Manufacturing makes its product for $70 per unit and sells it for $144 per unit. The sales staff receives a commission of 10% of sales. Its December Income statement follows. MERLINE MANUFACTURING Income Statement For Month Ended December 31 $ 1,440,000 700,000 740,000 Sales Cost of goods sold Gross profit Selling, general, and administrative expenses Sales commissions (10%) Advertising Office rent Administrative salaries Depreciation-office equipment Office Insurance Net income $ 144,000 228,000 25,400 47,000 57,000 13,400 514,800 $ 225,200 Management expects December's results to be repeated in January, February, and March without any changes in strategy. Management, however, has an alternative plan. It belleves that if the unit selling price is reduced to $129 per unit and advertising is Increased to $285,000 per month, sales units will be 11,000 for January, 12,100 for February, and 13,310 for March. The cost of its product will remain at $70 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same. Required: 1. Prepare budgeted Income statements for each of the months of January, February, and March that show results from Implementing the proposed plan. 2. For the proposed plan, Is Income In March budgeted to be higher than Income In December? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare budgeted income statements for each of the months of January, February, and March that show results from implementing the proposed plan. Note: Enter your final answers in whole dollars. Budgeted sales (in dollars) MERLINE MANUFACTURING Budgeted Sales January February March MERLINE MANUFACTURING Budgeted Income Statement January February March Merline Manufacturing makes its product for $70 per unit and sells it for $144 per unit. The sales staff receives a commission of 10% of sales. Its December Income statement follows. MERLINE MANUFACTURING Income Statement For Month Ended December 31 $ 1,440,000 700,000 740,000 Sales Cost of goods sold Gross profit Selling, general, and administrative expenses Sales commissions (10%) Advertising Office rent Administrative salaries Depreciation-office equipment Office Insurance Net income $ 144,000 228,000 25,400 47,000 57,000 13,400 514,800 $ 225,200 Management expects December's results to be repeated in January, February, and March without any changes in strategy. Management, however, has an alternative plan. It belleves that if the unit selling price is reduced to $129 per unit and advertising is Increased to $285,000 per month, sales units will be 11,000 for January, 12,100 for February, and 13,310 for March. The cost of its product will remain at $70 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same. Required: 1. Prepare budgeted Income statements for each of the months of January, February, and March that show results from Implementing the proposed plan. 2. For the proposed plan, Is Income In March budgeted to be higher than Income In December? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare budgeted income statements for each of the months of January, February, and March that show results from implementing the proposed plan. Note: Enter your final answers in whole dollars. Budgeted sales (in dollars) MERLINE MANUFACTURING Budgeted Sales January February March MERLINE MANUFACTURING Budgeted Income Statement January February March
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Related Book For
Fundamental Accounting Principles
ISBN: 978-0077862275
22nd edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta
Posted Date:
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