Question

Problem 23-3A Hill Industries had sales in 2016 of $7,520,000 and gross profit of $1,128,000. Management is considering two alternative budget plans to increase its gross profit in 2017. Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 10% from its 2016 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by 101,000 units. At the end of 2016, Hill has 44,000 units of inventory on hand. If Plan A is accepted, the 2017 ending inventory should be equal to 5% of the 2017 sales. If Plan B is accepted, the ending inventory should be equal to 72,000 units. Each unit produced will cost $1.80 in direct labor, $1.40 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2017 should be $1,944,000. Prepare a sales budget for 2017 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.) HILL INDUSTRIES Sales Budget Plan A Plan B Expected unit sales Unit selling price $ $ Total sales $ $ Link to Text Prepare a production budget for 2017 under each plan. HILL INDUSTRIES Production Budget Plan A Plan B : : Link to Text Compute the production cost per unit under each plan. (Round answers to 2 decimal places, e.g. 1.25.) Plan A Plan B Production cost per unit $ $ Link to Text Compute the gross profit under each plan. Plan A Plan B Gross Profit $ $ Which plan should be accepted? should be accepted. Link to Text Question Attempts: Unlimited Save for later Submit Answer

Answer 1