Hill Industries had sales in 2019 of $6,960,000and gross profit of $1,265,000. Management is considering two alternative budget plans to increase its gross profit in 2020.

Plan A would increase the selling price per unit from $8.00to $8.40. Sales volume would decrease by 10% from its 2019 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by119,000units.

At the end of 2019, Hill has47,000units 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 to66,000units. Each unit produced will cost $1.80in direct labor, $1.40in direct materials, and $1.20in variable overhead. The fixed overhead for 2020 should be $1,364,264.

Prepare a sales budget for 2020 under each plan. (round unit selling price answers to two decimal places)

Prepare a production budget for 2020 under each plan.

Compute the production cost per unit under each plan. (round answers to two decimal places)

Compute the gross profit under each plan.

Which plan should be accepted?