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Three years ago, Linda Williams and her brother$-$in$-$law Robert Jones opened Marin Department Store. For the first $2$ years, business

was good, but the following condensed income statement results for $2027$ were disappointing.

Linda believes the problem lies in the relatively low gross profit rate of $20\%.$ Robert believes the problem is that operating expenses

are too high. Linda thinks the gross profit rate can be improved by making two changes. $(1)$ Increase average selling prices by $15\%$; this

increase is expected to lower sales volume so that total sales dollars will increase only $4\%.(2)$ Buy merchandise in larger quantities

and take all purchase discounts. These changes to purchasing practices are expected to increase the gross profit rate from its current

rate of $20\%$ to a new rate of $25\%.$ Linda does not anticipate that these changes will have any effect on operating expenses.

Robert thinks expenses can be cut by making these two changes. $(1)$ Cut $2028$ sales salaries of $$62,250$ in half and give sales

personnel a commission of $2\%$ of net sales. $(2)$ Reduce store deliveries to one day per week rather than twice a week; this change will

reduce $2028$ delivery expenses of $$41,500$ by $40\%.$ Robert feels that these changes will not have any effect on net sales.

Linda and Robert come to you for help in deciding the best way to improve net income.

With the class divided into groups, answer the following.

Prepare a condensed income statement for $2028$ assuming Linda's changes are implemented.

MARIN DEPARTMENT STORE

Projected Income Statement This question has a part a$2$ and c$.$ Can see them till i answer part a$1.$ please get it right. thank you

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