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Lily industries had sales in 2 0 2 4 of $ 7 , 8 8 8 , 0 0 0 and gross profit of $

Lily industries had sales in 2024 of $7,888,000 and gross profit of $1,276,000. Management is considering two alternative budget plans to increase its gross profit in 2025.
Plan A would increase the unit selling proce from $8.00 to $8.40. Sales volume would decrease by 145,000 units from its 2024 level. Plan B would decrease the unit selling price by $0.50. The marketing department expects that the sales volume would increase by 150,800.
Prepare a sales budget for 2025 under each plan. Provide Expected Unit Sales, Unit Selling price and Total Sales for Plan A and Plan B.
At the end of 2024, Lily has 46,400 units of inventory on hand. If Plan A is accepted, the 2025 ending inventory should be 40,600 units. If Plan B is accepted, the ending inventory should be equal to 69,600 units. Each unit produced will cost $1.50 in direct labor, $1.30 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2025 should be $2,171,520.
Prepare a production budget.
Compute the production cost per unit under each plan.
Compute the gross profit under each plan
Which plan should be accepted and brief explanation why.

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