Problem 22-3A Manufacturing: Preparation and analysls of budgeted Income statements LO P3 Merline Manufacturing makes...
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Problem 22-3A Manufacturing: Preparation and analysls of budgeted Income statements LO P3 Merline Manufacturing makes its product for $70 per unit and sells it for $132 per unit. The sales staff receives a 10% commission on the sale of each unit its December income statement follows. Income Statement 31. 2015 Sales Cost of goods sold S 1,320,000 700,000 Gross profit 620,000 Advertising Store rent Administrative salaries Depreciat Other expenses 132,000 204,000 24.200 41,000 51,000 12,200 fice equipment Total expenses 464 400 S 155,600 Management expects December's results to be repeated in January, February, and March of 2016 without any changes in strategy Management, however, has an alternative plan. It believes that unit sales wil increase at a rate of 10% each month for the next three months (beginning with January) If the item's selling price is reduced to S117 per unit and advertising expenses are increased by 15% and remain at that level for all three months. The cost of its product will remain at $70 per unit, the sales staff to earn a 10% sion, and the remaining expenses will stay the same Required: ncome statements for each of the months of January February, and March that s change
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