Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 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 $Ivanhoe Industries had sales in 2021 of $7,344,000 and gross prot of $1,188,000. Management is considering two alternative budget plans to increase its gross prot in 2022. Plan Awould increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 135,000 units 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 by 140,400 units. At the end of 2021, Ivanhoe has 46,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 42,000 units. If Plan Bis accepted, the ending inventory should be equal to 76,000 units. Each unit produced will cost $1.50 in direct labor, $1.30 in direct materials, and $1.20 in variable overhead. The xed overhead for 2022 should be $2,048,000. Your answer is correct. Prepare a production budget for 2022 under each plan. IVANHOE INDUSTRIES Production Budget For the Year Ending December 31, 2022 Plan A Plan B Expected Unit Sales 783000 1058400 Add Desired Ending Finished Goods Units 42000 76000 Total Required Units 825000 1134400 Less Beginning Finished Goods Units 46000 46000 i Required Production Units 779000 1088400
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