Current Attempt in Progress

Sheridan Industries had sales in $2019$ of $$6,880,000$ and gross profit of $$1,205,000.$ Management is considering two alternative budget plans to increase its gross profit in $2020.$

Plan A would increase the selling price per unit from $$8\mathrm{.}00$ to $$8\mathrm{.}40.$ Sales volume would decrease by $10\%$ from its $2019$ level. Plan B would decrease the selling price per unit by $$0\mathrm{.}50.$ The marketing department expects that the sales volume would increase by $102,000$ units.

At the end of $2019,$ Sheridan has $41,000$ 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 $64,000$ units. Each unit produced will cost $$1\mathrm{.}80$ in direct labor, $$1\mathrm{.}40$ in direct materials, and $$1\mathrm{.}20$ in variable overhead. The fixed overhead for $2020$ should be $$1,358,192.$