Santana Rey expects second quarter 2022 net income of Business Solutions's line of computer furniture to be the same as the first quarter's net income (reported below) without any changes in strategy. Sales were 148 desk units (sales price of $1,250) and 88 chairs (sales price of $500). BUSINESS SOLUTIONS-Computer Furniture Segment Segment Income Statement* For Quarter Ended March 31, 2022 Sales Cost of goods sold* Gross profit Selling, general, and administrative expenses Sales commissions (10%) Advertising expenses General and administrative expenses Net income $ 22,900 11,800 23,600 * Reflects activity only related to the computer furniture segment. † Sales: (148 × $1,250) + (88 × $500) = $229,000. + Cost of goods sold: (148 x $750) + (88 × $250) = $133,000. $ 229,000 133,000 96,000 58,300 $ 37,700 Santana believes that sales will total 198 desks and 147 chairs for the next quarter if selling prices are reduced to $1,150 for desks and $450 for chairs and advertising expenses are increased to $17,040 for the quarter. Product costs per unit and amounts of all other expenses will not change. Required: 1. Prepare a budgeted income statement for the computer furniture segment for the quarter ended June 30, 2022, that shows the results from implementing the proposed changes. 2. Do the proposed changes increase or decrease budgeted net income for the quarter?
Santana Rey expects second quarter 2022 net income of Business Solutions's line of computer furniture to be the same as the first quarter's net income (reported below) without any changes in strategy. Sales were 148 desk units (sales price of $1,250) and 88 chairs (sales price of $500). BUSINESS SOLUTIONS-Computer Furniture Segment Segment Income Statement* For Quarter Ended March 31, 2022 Sales Cost of goods sold* Gross profit Selling, general, and administrative expenses Sales commissions (10%) Advertising expenses General and administrative expenses Net income $ 22,900 11,800 23,600 * Reflects activity only related to the computer furniture segment. † Sales: (148 × $1,250) + (88 × $500) = $229,000. + Cost of goods sold: (148 x $750) + (88 × $250) = $133,000. $ 229,000 133,000 96,000 58,300 $ 37,700 Santana believes that sales will total 198 desks and 147 chairs for the next quarter if selling prices are reduced to $1,150 for desks and $450 for chairs and advertising expenses are increased to $17,040 for the quarter. Product costs per unit and amounts of all other expenses will not change. Required: 1. Prepare a budgeted income statement for the computer furniture segment for the quarter ended June 30, 2022, that shows the results from implementing the proposed changes. 2. Do the proposed changes increase or decrease budgeted net income for the quarter?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Santana Rey expects second quarter 2022 net income of Business Solutions's line of computer furniture to be the same as the first
quarter's net income (reported below) without any changes in strategy. Sales were 148 desk units (sales price of $1,250) and 88 chairs
(sales price of $500).
BUSINESS SOLUTIONS-Computer Furniture Segment
Segment Income Statement *
For Quarter Ended March 31, 2022
Sales+
Cost of goods sold*
Gross profit
Selling, general, and administrative expenses
Sales commissions (10%)
Advertising expenses
General and administrative expenses
Net income
$ 22,900
11,800
23,600
* Reflects activity only related to the computer furniture segment.
† Sales: (148 × $1,250) + (88 × $500) = $229,000.
‡ Cost of goods sold: (148 × $750) + (88 × $250) = $133,000.
$ 229,000
133,000
96,000
58,300
$ 37,700
Santana believes that sales will total 198 desks and 147 chairs for the next quarter if selling prices are reduced to $1,150 for desks and
$450 for chairs and advertising expenses are increased to $17,040 for the quarter. Product costs per unit and amounts of all other
expenses will not change.
Required:
1. Prepare a budgeted income statement for the computer furniture segment for the quarter ended June 30, 2022, that shows the
results from implementing the proposed changes.
2. Do the proposed changes increase or decrease budgeted net income for the quarter?
Transcribed Image Text:Required 1 Required 2
Prepare a budgeted income statement for the computer furniture segment for the quarter ended June 30, 2022, that shows
the results from implementing the proposed changes.
BUSINESS SOLUTIONS-COMPUTER FURNITURE SEGMENT
Net income
Budgeted Income Statements
For Three Months Ended June 30, 2022
Selling, general and administrative expenses
$
0
0
0
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