Santana Rey expects second$-$quarter $2020$ sales of Business Solutions's line of computer furniture to be the same as the first quarter's sales $($reported below$)$ without any changes in strategy. Monthly sales averaged $42$ desk units $($sales price of $$1,280)$ and $23$ chairs $($sales price of $$530).$

$\backslash$table$[[\backslash$table$[[$BUSINESS SOLUTIONS$-$Computer Furniture$],[$Segment Income Statement$*],[$For Quarter Ended March $31,202]],20],[$Sales ${?}^{+},$$$197,850$

Santana Rey expects second$-$quarter $2020$ sales of Business Solutions's line of computer furniture to be the same as the first quarter's sales $($reported below$)$ without any changes in strategy. Monthly sales averaged $42$ desk units $($sales price of $$1,280)$ and $23$ chairs $($sales price of $$530).$

Reflects revenue and expense activity only related to the computer furniture segment.

$$ Revenue: desks $$$$1,280$ chairs $$$$530$

$$ Cost of goods sold: desks $$$$780$ chairs $$$$280$

Santana Rey believes that sales will increase each month for the next three months $($April$,50$ desks, $35$ chairs; May, $54$ desks, $38$ chairs; June, $58$ desks, $41$ chairs$)$ if selling prices are reduced to $$1,180$ for desks and $$480$ for chairs and advertising expenses are increased by $10\%$ and remain at that level for all three months. The products' variable cost will remain at $$780$ for desks and $$280$ for chairs. The sales staff will continue to earn a $10\%$ commission, the fixed manufacturing costs per month will remain at $$10,300$ and other fixed expenses will remain at $$6,300$ per month.

Required:

Prepare budgeted income statements for the computer furniture segment for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three$-$column format, with one column for each month. $2.$ Recommend whether Santana should implement the proposed changes. Hint Compare quarterly income for the proposed AprilMay$-$June period to the quarterly income for the January$-$February$-$March period.

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Prey

$5$ of $9$

Next

Recommend whether Santana should implement the proposed changes. Hint Compare quarterly income for the proposed AprilMay$-$June period to the quarterly income for the January$-$February$-$March period.

Complete this question by entering your answers in the tabs below.

Required $1$

Prepare budgeted income statements for the computer furniture segment for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three$-$column format, with one column for each month. $($Negative balances and should be indicated with minus sign.$)$

$\backslash$table$[[$BUSINESS SOLUTIONS$-$COMPUTER FURNITURE SEGMENT$],[$Budgeted Income Statements$],[$For Months of April, May, and June$],[,,$April,May,,June$],[$Sales$,$$$,62,710,,L,],[$Cost of goods sold$],[$Gross profit,,$62,710,0,,0],[$Expenses$],[$Sales commissions$],[$Advertising$,$L$,,0,,0],[$Other fixed expenses,E$,,0,,0],[$Total expenses,,$0,0,,0],[$Net income $($loss$),5,,,,]]$