Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. p13-3 hill industries had sales in 2016 of $6,800,

P13-3 Hill Industries had sales in 2016 of $6,800,000 and gross profi t of $1,100,000....

50.1K

Verified Solution

Question

Accounting

P13-3 Hill Industries had sales in 2016 of $6,800,000 and gross profi t of $1,100,000. Management is considering two alternative budget plans to increase its gross profi t 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 100,000 units. At the end of 2016, Hill has 40,000 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 60,000 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 $1,895,000. Instructions (a) Prepare a sales budget for 2017 under each plan. (b) Prepare a production budget for 2017 under each plan. (c) Compute the production cost per unit under each plan. Why is the cost per unit different for each of the two plans? (Round to two decimals.) (d) Which plan should be accepted? (Hint: Compute the gross profit under each plan.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Is determining the modality (competitive, uncompetitive, noncompetitive) of an inhibitory compound important? If so, why? Under what...

Biology
1.2K views

Generally speaking, the DNA sequences of introns evolve relatively rapidly, and are not well conserved. Nevertheless,...

Psychology
1.2K views

1. According to Driessen and Heutinck, is it ethical to introduce robotic technologies on farms from...

General Management
1.2K views

is it worth now days to get certificatiions in supply chain industries nowdays; do companies place...

Basic Math
1.2K views

Real GDP per capita in the United States grew from about 6 000 in 1900...

Basic Math
1.2K views

Evaluate the expression when m 3 m 6m 8

Basic Math
1.2K views

In a certain city of several million people, 5.7% of the adults are unemployed. If...

Accounting
1.2K views

In 2021, Stevenson Company has plant equipment that originally cost $55,000 and...

Accounting
1.2K views

correct answer please Which of the following costs are...

Accounting
1.2K views

The income starement, baiance sheets, and addisional informetion for Cloud Manqu are provided. Additional information...

Accounting
1.2K views

Allen Green is a single taxpayer whose income includes $176,000 of salary, $28,600 of interest...

Accounting
1.2K views

High Country, Inc, produces and sells many recreational products. The company has just opened a...