Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Bonita Industries had sales in 2021 of $7,208,000 and gross profit of $1,166,000. Management is considering two alternative budget plans to increase its gross profit
Bonita Industries had sales in 2021 of $7,208,000 and gross profit of $1,166,000. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the unit selling price from $8 to $8.4. Sales volume would decrease by 133,000 units from its 2021 level. Plan B would decrease the unit selling price by $1. The marketing department expects that the sales volume would increase by 138,000 units. At the end of 2021, Bonita has 42,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 37,000 units. If Plan B is accepted, the ending inventory should be equal to 64,000 units. Each unit produced will cost $1.50 in direct labor: $1.30 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2022 should be $2,060,100. (a) Your answer is correct Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.) Prepare a production budget for 2022 under each plan
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started