Hill Industries had sales in 2016 of $6,960,000 and gross profit of $1,187,000. 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 110,000 units. At the end of 2016, Hill has 41,000 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 68,000 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 $1,883,000.

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Prepare a production budget for 2017 under each plan HILL INDUSTRIES Production Budget For the Year Ending December 31, 2017 Plan A Plan B Expected Unit Sales 704700 814700 Add v Desired Ending Finished Goods Units 35235 68000 Total Pounds Needed for Production ? 739935 882700 Less Beginning Direct Materials 41000 41000 Required Production Units 698935 841700 LINK TO TEXT Your answer is incorrect. Try again 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 7.09 6.64 LINK TO TEXT Your answer is incorrect. Try again Compute the gross profit under each plan Plan A Plan B Gross Profit 1187000 1187000 Which plan should be accepted? Plan AY