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 136 desk units (sales price of $1,250) and 76 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 $ 208,000 121,000 87,000 $ 20,800 10,600 21,200 52,600 $ 34,400 Reflects activity only related to the computer furniture segment. † Sales: (136 $1,250) + (76 x $500) = $208,000. + Cost of goods sold: (136 x $750)+(76 x $250) $121,000. Santana believes that sales will total 180 desks and 129 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 $14,880 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? Complete this question by entering your answers in the tabs below.
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 136 desk units (sales price of $1,250) and 76 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 $ 208,000 121,000 87,000 $ 20,800 10,600 21,200 52,600 $ 34,400 Reflects activity only related to the computer furniture segment. † Sales: (136 $1,250) + (76 x $500) = $208,000. + Cost of goods sold: (136 x $750)+(76 x $250) $121,000. Santana believes that sales will total 180 desks and 129 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 $14,880 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? Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
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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 136 desk units (sales price of $1,250) and 76 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
$ 208,000
121,000
87,000
$ 20,800
10,600
21, 200
52,600
*Reflects activity only related to the computer furniture segment.
† Sales: (136 $1,250)+(76 x $500) = $208,000.
+ Cost of goods sold: (136 x $750) + (76 x $250) = $121,000.
$ 34,400
Santana believes that sales will total 180 desks and 129 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 $14,880 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?
Complete this question by entering your answers in the tabs below.
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