Pharoah Industries had sales in 2021 of $6,120,000 and gross profit of $990,000. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 112,500 units from its 2021 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by 117,000 units. At the end of 2021, Pharoah has 37,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 33,000 units. If Plan B is accepted, the ending inventory should be equal to 58,000 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 2022 should be $1,706,000.

Compute the gross profit under each plan.

Which plan should be accepted?