Lily Industries had sales in 2021 of $5,467,200 and gross profit of $884,400. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the unit selling price from $8.00 to $8.40. Sales volume would decrease by 100,500 units from its 2021 level. Plan B would decrease the unit selling price by $0.50. The marketing department expects that the sales volume would increase by 104,520 units. At the end of 2021, Lily has 32,160 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 28,140units. If Plan B is accepted, the ending inventory should be equal to 48,240 units. Each unit produced will cost $1.5 in direct labor, $1.3 in direct materials, and $1.2 in variable overhead. The fixed overhead for 2022 should be $1,523,580.

(b)

Prepare a production budget for 2022 under each plan.

LILY INDUSTRIES Production Budget choose the accounting period For the Year Ending December 31, 2022For the Quarter Ending December 31, 2022December 31, 2022
		Plan A		Plan B
select an opening production budget item Direct Materials per UnitBeginning Direct MaterialsDirect Materials PurchasesTotal Materials RequiredTotal Required UnitsExpected Unit SalesDesired Ending Finished Goods UnitsTotal Pounds Needed for ProductionRequired Production UnitsBeginning Finished Goods UnitsDesired Ending Direct Materials		enter a number of units		enter a number of units
select between addition and deduction AddLess: select a production budget item Expected Unit SalesDirect Materials PurchasesDirect Materials per UnitRequired Production UnitsDesired Ending Direct MaterialsBeginning Direct MaterialsDesired Ending Finished Goods UnitsBeginning Finished Goods UnitsTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Units		enter a number of units		enter a number of units
select a summarizing line for the first part Expected Unit SalesBeginning Finished Goods UnitsDesired Ending Direct MaterialsTotal Materials RequiredDirect Materials PurchasesTotal Pounds Needed for ProductionBeginning Direct MaterialsDirect Materials per UnitDesired Ending Finished Goods UnitsRequired Production UnitsTotal Required Units		enter a total number of units for the first part		enter a total number of units for the first part
select between addition and deduction AddLess: select a production budget item Total Materials RequiredDesired Ending Direct MaterialsBeginning Direct MaterialsTotal Pounds Needed for ProductionExpected Unit SalesBeginning Finished Goods UnitsDirect Materials per UnitDesired Ending Finished Goods UnitsTotal Required UnitsDirect Materials PurchasesRequired Production Units		enter a number of units		enter a number of units
select a closing production budget item Beginning Finished Goods UnitsTotal Pounds Needed for ProductionRequired Production UnitsDirect Materials PurchasesBeginning Direct MaterialsDesired Ending Finished Goods UnitsExpected Unit SalesDirect Materials per UnitDesired Ending Direct MaterialsTotal Required UnitsTotal Materials Required		enter a total number of units for the production budget		enter a total number of units for the production budget

(c1)

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		$enter a dollar amount rounded to 2 decimal places		$enter a dollar amount rounded to 2 decimal places

(d)

Compute the gross profit under each plan. (Round answers to 0 decimal places, e.g. 125.)

		Plan A		Plan B
Gross Profit		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places

Which plan should be accepted?

select the plan Plan APlan B should be accepted.