Solved by verified expert :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 42 desk units (sales price of $1,270) and 22 chairs (sales price of $520).SUCCESS SYSTEMSSegment Income Statement*For Quarter Ended March 31, 2014Sales† $ 194,340Cost of goods sold‡ 145,440Gross profit 48,900ExpensesSales commissions (10%) 19,434Advertising expenses 9,600Other fixed expenses 18,600Total expenses 47,634Net income $ 1,266* Reflects revenue and expense activity only related to the computer furniture segment.† Revenue: (126 desks × $1,270) + (66 chairs × $520) = $160,020 + $34,320 = $194,340‡ Cost of goods sold: (126 desks × $770) + (66 chairs × $270) + $30,600 = $145,440Adria Lopez believes that sales will increase each month for the next three months (April, 50 desks, 34 chairs; May, 54 desks, 37 chairs; June, 58 desks, 40 chairs) if selling prices are reduced to $1,170 for desks and $470 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 $770 for desks and $270 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,200 and other fixed expenses will remain at $6,200 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. Use a three-column format, with one column for each month.2.Recommend whether Adria Lopez should implement the proposed changes.____ Should not implement the proposed changes____ Should implement the proposed changes—————————————————————————– Page 2 ——————————————————————–Success Systems’ second quarter 2014 fixed budget performance report for its computer furniture operations follows. The $170,240 budgeted expenses include $113,760 in variable expenses for desks and $18,480 in variable expenses for chairs, as well as $38,000 fixed expenses. The actual expenses include $39,600 fixed expenses. List fixed and variable expenses separately.Fixed Budget Actual Results VariancesDesk sales (in units) 144 150Chair sales (in units) 66 74Desk sales (in dollars) $ 181,440 $ 187,500 $ 6,060 FChair sales (in dollars) $ 36,300 $ 41,810 $ 5,510 FTotal expenses $ 170,240 $ 179,230 $ 8,990 UIncome from operations $ 47,500 $ 50,080 $ 2,580 FPrepare a flexible budget performance report that shows any variances between budgeted results and actual results.I hope I posted this is the appropriate spot, I need step by step answers so I can see and understand the problem. I wasn’t able too copy the correct template for Question #1 Problem #1, and Question #2 Problem #2 (Page 2 problem) however I did get the directions and what was being asked. The Book is “Fundamental Accounting Principles Wild, 21st ed.” Covering Chapters 22/23.
