Hill Industries had sales in 2019 of $7,200,000 and gross profit of $1,158,000. Management is considering two alternative budget plans to increase its gross profit in 2020.

Plan A would increase the selling price per unit from $8.00 to $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 by 111,000 units.

At the end of 2019, Hill has 40,000 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 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 $1,507,530.

1. Prepare a sales budget for 2020 under each plan.

2. Prepare a production budget for 2020 under each plan.

3. Compute the production cost per unit under each plan.

4. Compute the gross profit under each plan.

5. Which plan should be accepted?

Prepare a production budget for 2020 under each plan. HILL INDUSTRIES Production Budget Plan A Plan B 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 gross profit under each plan. Plan A Plan B Gross Profit $ Which plan should be accepted? should be accepted. Industri hadis in 2019 of 7.200,000 and gros profof 1,150,000. Mengement is considering water ve buget pas tareas its grous profitin 2020 ran A would increase the setting pret per unit from st. 58.40. Sales volume would decrease by from its 2019 let. Plens would decrease the setting price per unit by 30.30. The marketing department expect that the new r111,00 At the end of 2000, S40,000 of any on and wants, the 2020 og er en 2020. story that be to W, 51.0 m, 120 narobe overtred. The rendered for 2020 e 30 Prepare a sales before than ang price were decir...) HILL INGUSTES sales ty Plan HILAIRES