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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 $44$ desk units $($sales price of $$1,300)$ and $25$ chairs $($sales price of $$550).$

BUSINESS SOLUTIONS$$Computer Furniture Segment

Segment Income Statement$*$

For Quarter Ended March $31,2020$

Sales$$ $ $212,850$

Cost of goods sold$159,600$

Gross profit $53,250$

Expenses

Sales commissions $(10\%)21,285$

Advertising expenses $10,500$

Other fixed expenses $19,500$

Total expenses $51,285$

Net income $ $1,965$

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

$$ Revenue: desks $$$$1,300$ chairs $$$$550$

$$ Cost of goods sold: desks $$$$800$ chairs $$$$300$

Santana Rey believes that sales will increase each month for the next three months $($April$,52$ desks, $37$ chairs; May, $56$ desks, $40$

chairs; June, $60$ desks, $43$ chairs$)$ if selling prices are reduced to $$1,200$ for desks and $$500$ 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 $$800$ for desks and $$300$ for

chairs. The sales staff will continue to earn a $10\%$ commission, the fixed manufacturing costs per month will remain at $$10,500$ and

other fixed expenses will remain at $$6,500$ 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.

Recommend whether Santana should implement the proposed changes. Hint. Compare quarterly income for the proposed April$-$

May$-$June period to the quarterly income for the January$-$February$-$March period.

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

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.$)$

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