MACW Review Views Insert Draw Page Layout Formulas Data Home 3 . B D E Using sensitivity analysis Holly Company prepared the following budgeted income statement for the first quarter of 2021 HOLLY COMPANY Budgeted Income Statement For the Quarter Ended March 31, 2021 Sales Revenue (10% increase per month) Cost of Goods Sold (60% of sales) 12 Gross Profit SBA Expenses ($1,000+ 10% of sales 14 Operating Income 15 Income Tax Expense 30% of operating income) 16 17 Net Income 18 January $ 10.000 6,000 4,000 2.000 2.000 February $11,000 6,600 4.400 2,100 2.300 690 March $ 120100 7260 4,840 2,210 2.630 Total $ 33, 100 19.860 13,240 6,310 6,930 2,079 600 789 $ 1,400 S 1,610 $ 1,841 $ 4,851 Holly Company is considering two options. Option 1 is to increase advertising by $1,000 per month. Option 2 is to use bet better materials will increase the cost of goods sold to 65% but will provide a better product at the same sales price. Thema 19 increases of 20% per month rather than 10% 20 21 Requirements 22 1. Prepare budgeted income statements for both options, assuming January sales remain 510,000 23 2. Which option should Holly choose? Explain your reasoning 24 25 26 27 28 Holly Company 29 Budgeted Income Statement Instructions 2 3 + Ready Buy http SHOU ? 24