Problem 22-3A Manufacturing: Preparation and analysis of budgeted income statements LO P3 Merline Manufacturing makes its product for $70 per unit and sells it for $138 per unit. The sales staff receives a 10% commission on the sale of each unit, its December income statement follows MERLINE MANUFACTURING Income Statement For Month Ended December 31, 2019 Sales $1,380,000 Cost of goods sold 780,000 Gross profit 680,000 Operating expenses Sales commissions (10%) 138,000 Advertising 216,000 Store rent 24,800 Administrative salaries 44,000 Depreciation-office equipoent 54,000 Other expenses 12,800 Total expenses 489,600 Net income 190,400 Management expects December's results to be repeated in January, February, and March of 2020 without any changes in strategy Management, however, has an alternative plan. It believes that unit sales will 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 $123 per unit and advertising expenses are increased by 20% and remain at that level for all three months. The cost of its product will remain at $70 per unit, the sales staff will continue to eam 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 the expected results from Implementing the proposed changes, 2. Is net income for March expected to increase with the proposed strategy changes? Complete this question by entering your answers in the tabs below. Required: Required 2 Prepare budgeted Income statements for each of the months of January, February, and March that show the expected results from implementing the proposed changes. (Enter your final answers in whole dollars.) MERLINE MANUFACTURING Budgeted Sales For Months of January, February, and March, 2020 January February March Budgeted sales in dollars) MERLINE MANUFACTURING Budgeted Income Statement For Months of January, February, and March, 2020 For Months of January, February, and March, 2020 January February March Expenses Sales commissions Advertising Store rent Administrative salaries Depreciation-Office equipment Other expenses Total expenses Required Required 2 >