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Hill Industries had sales in 2019 of $6,960,000 and gross profit of $1,126,000. Management is...

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Accounting

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Hill Industries had sales in 2019 of $6,960,000 and gross profit of $1,126,000. Management is considering two alternative budget plans to increase its gross profit in 2020. Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 10% from its 2019 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by 109,000 units. At the end of 2019 . Hill has 46,000 units of inventory on hand. If Plan A is accepted, the 2020 ending inventory should be equal to 5% of the 2020 sales. If Plan B is accepted, the ending inventory should be equal to 70,000 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 2020 should be $1,986,944. Prepare a sales budget for 2020 under each plan. (Round Unit selling prine answers to 2 decimal places, eg. 52.70 .) Prepare a production budget for 2020 under each plan. Compute the production cost per unit under each plan. (Round answers to 2 decimal places, eg. 1.25.) (d) - Your answer is partially correct. Compute the gross profit under each plan. Which plan should be accepted? should be accepted

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