Accounting Chapter 22 team discussion problem (I`m the month June)

For chapter 22, the discussion problem is the Serial Problem on pp. 942-943 of the textbook. Complete part 1 only; each team member should prepare a budgeted income statement for a different month (April, May, or June).

The problem is reproduced below. For full credit, present the budgeted income statement for your month neatly, and show all calculations for your Sales andCost of Goods Sold figures.

IMPORTANT INSTRUCTIONS:

1. Navigate to your Group Homepage by hovering your cursor over our course at the Courses dropdown menu at the top of this page. Use yourGroup's Announcementtool to decide among your group-mates who will prepare the budget for which month.

2. Once your roles are agreed, post your solutions in your group's Discussion forum. For full credit, be sure to comment on your teammates' posts.

SP 22

Adria Lopez expects second quarter 2014 sales of her new line of computer furniture to be the same as the first quarter's sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,250) and 20 chairs (sales price of $500).

Adria Lopez believes that sales will increase each month for the next three months (April, 48 desks, 32 chairs; May, 52 desks, 35 chairs; June, 56 desks, 38 chairs) if selling prices are reduced to $1,150 for desks and $450 for chairs, and advertising expenses are increased by 10% and remain at that level for all three months. The products' variable cost will remain at $750 for desks and $250 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,000 and other fixed expenses will remain at $6,000 per month.

Required

1. Prepare budgeted income statements for each of the months of April, May, and June that show the expected results from implementing the proposed changes.