Hill Industries had sales in 2016 of $6,960,000and gross profit of $1,126,000. Management is considering two alternative budget plans to increase its gross profit in 2017.

Plan A would increase the selling price per unit from $8.00to $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 by109,000units.

At the end of 2016, Hill has46,000units 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 to70,000units. Each unit produced will cost $1.80in direct labor, $1.40in direct materials, and $1.20in variable overhead. The fixed overhead for 2017 should be $1,984,000