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CraneIndustries had sales in 2021 of $7,072,000and gross profit of $1,144,000. Management is considering two...

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Accounting

CraneIndustries had sales in 2021 of $7,072,000and gross profit of $1,144,000. Management is considering two alternative budget plans to increase its gross profit in 2022.

Plan A would increase the selling price per unit from $8.00to $8.40. Sales volume would decrease by130,000units from its 2021 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by135,200units.

At the end of 2021,Cranehas44,000units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be40,000units. If Plan B is accepted, the ending inventory should be equal to72,000units. Each unit produced will cost $1.50in direct labor, $1.30in direct materials, and $1.20in variable overhead. The fixed overhead for 2022 should be $1,972,000.

CRANEINDUSTRIES

Sales Budget

For the Year Ending December 31, 2022

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CoursHeroTranscribedText: CRANE INDUSTRIES Production Budget Plan A Plan B VPlan A Plan B Production cost per unitPlan A Plan B Gross Profit Which plan should be accepted? should be accepted

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