The Budgeted Income Statement for January, February and March

Question

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Answer 1

Question

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000

Conclusion

Conclusion: Hence, the Management should not implement the proposed changes.

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Answer 2

Question

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000

Conclusion

Conclusion: Hence, the Management should not implement the proposed changes.

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Answer 3

Question

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000

Conclusion

Conclusion: Hence, the Management should not implement the proposed changes.

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Answer 4

Question

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000

Conclusion

Conclusion: Hence, the Management should not implement the proposed changes.

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Answer 5

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000

Conclusion

Conclusion: Hence, the Management should not implement the proposed changes.

Answer 6

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Answer 7

Chapter 22, Problem 3APSA

Requirement-1:

To determine

To prepare: The Budgeted Income Statement for January, February and March

Answer 8

Requirement-1:

Expert Solution

Answer to Problem 3APSA

Solution: The Budgeted Income Statement for January, February and March is as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Sales	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission	$ 206,250	$ 226,875	$ 249,563
Advertising	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses	$ 628,750	$ 649,375	$ 672,063

Net Income	$ 196,250	$ 258,125	$ 326,188

Answer 9

Requirement-1:

Expert Solution

Answer 10

Requirement-1:

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Explanation: The Budgeted Income Statement for January, February and March is prepared as follows:

MERLINE MANUFACTURING
Budgeted Income Statement
	January	February	March
Unit Sales (A)	16500	18150	19965
	(15000*110%)	(16500*110%)	(18150*110%)
Selling Price (B)	$ 125	$ 125	$ 125
Sales (C) = A*B =	$ 2,062,500	$ 2,268,750	$ 2,495,625
Cost of Goods Sold (D) = A*$75 =	$ 1,237,500	$ 1,361,250	$ 1,497,375
Gross Profit (E) = C-D =	$ 825,000	$ 907,500	$ 998,250
Operating Expenses:
Sales Commission (C*10%)	$ 206,250	$ 226,875	$ 249,563
Advertising (250000*115%)	$ 287,500	$ 287,500	$ 287,500
Store Rent	$ 30,000	$ 30,000	$ 30,000
Administrative expenses	$ 45,000	$ 45,000	$ 45,000
Depreciation-Office Equipment	$ 50,000	$ 50,000	$ 50,000
Other expenses	$ 10,000	$ 10,000	$ 10,000
Total Expenses (F)	$ 628,750	$ 649,375	$ 672,063

Net Income (E-F)	$ 196,250	$ 258,125	$ 326,188

Answer 13

Conclusion

Conclusion:

Hence, the budgeted net income for next three months shall be as follows:

	January	February	March
Net Income	$ 196,250	$ 258,125	$ 326,188

Answer 14

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000

Conclusion

Conclusion: Hence, the Management should not implement the proposed changes.

Answer 15

Requirement-2:

To determine

To determine: The decision to implement the proposed change

Answer 16

Requirement-2:

Expert Solution

Answer to Problem 3APSA

Solution: The Management should not implement the proposed changes.

Answer 17

Requirement-2:

Expert Solution

Answer 18

Requirement-2:

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Explanation: The Management should not implement the proposed changes because the budgeted net income for each month is less than the current net income of $515,000