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Bridgeport Industries had sales in 2016 of $7,200,000 and gross profit of $1,213,000. Management is considering two alternative budget plans to increase its gross profit
Bridgeport Industries had sales in 2016 of $7,200,000 and gross profit of $1,213,000. 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 102,000 units. At the end of 2016, Bridgeport has 45,000 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 Dis accepted, the ending inventory should be equal to 62,000 units. Each unit produced will cost $1.00 in direct labor $1.40 in direct materials, and $1.20 in variable overhead, The fixed overhead for 2017 should be $1,370,000. Prepare a sales budget for 2017 under each plan. (Round Unit selling price answers to 2 decimal aces, 0.52.70.) BRIDGEPORT INDUSTRIES Sales Budget Plan A Plan B Expected unit sales 810000 1002000 Unit selling price 8.4 I 7.5 $ Total sales $ 6804000 7515000 Prepare a production budget for 2017 under each plan. Y BRIDGEPORT INDUSTRIES Production Budget Plan A Plan B 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 $ $ Compute the gross profit under each plan. Plan A Plan B Gross Profit $ Which plan should be accepted? should be accepted. Click if you would like to Show Work for this question: Open Show Work
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