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Merline Manufacturing makes its product for $65 per unit and sells it for $131 per unit....

Merline Manufacturing makes its product for $65 per unit and sells it for $131 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, 2017
Sales $ 1,310,000
Cost of goods sold 650,000
Gross profit 660,000
Operating expenses
Sales commissions (10%) 131,000
Advertising 202,000
Store rent 24,100
Administrative salaries 40,500
Depreciation—Office equipment 50,500
Other expenses 12,100
Total expenses 460,200
Net income $ 199,800


Management expects December’s results to be repeated in January, February, and March of 2018 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 $116 per unit and advertising expenses are increased by 10% and remain at that level for all three months. The cost of its product will remain at $65 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same.

Required:
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, 2018
January February March
Budgeted sales (in dollars)
MERLINE MANUFACTURING
Budgeted Income Statement
For Months of January, February, and March, 2018
January February March
Expenses
Sales commissions
Advertising
Store rent
Administrative salaries
Depreciation—Office equipment
Other expenses
Total expenses 0 0 0
$0 $0 $0

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