Problem 23-3A Hill Industries had sales in 2016 of $ 6,800,000 and gross profit of $ 1,100,000 . Management is considering two alternative budget plans to increase its gross profit in 2017. Plan A would increase the selling price per unit from $ 8.00 to $ 8.40. Sales volume would decrease by 10% from its 2016 level. Plan B would decrease the selling price per unit by $ 0.50 . The marketing department expects that the sales volume would increase by 100,000 units. At the end of 2016, Hill has 40,000 units of inventory on hand. If Plan A is accepted, the 2017 ending inventory should be equal to 5% of the 2017 sales. If Plan B is accepted, the ending inventory should be equal to 60,000 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 $ 1,895,000 . Your answer is correct. Prepare a sales budget for 2017 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.) HILL INDUSTRIES Sales Budget For the Year Ending December 31, 2017 Plan A Plan B Expected unit sales 765000 950000 Unit selling price 8.40 7.50 $ Total sales 6426000 7125000 $ Your answer is partially correct. Try again. Prepare a production budget for 2017 under each plan. HILL INDUSTRIES Production Budget For the Year Ending December 31, 2017 Plan A Plan B Expected Unit Sales 765000 950000 x Add : Desired Ending Finished Goods Units V 382500 60000 Total Required Units 1,147,500 1010000 Less V : Beginning Finished Goods Units 40,000 40000 Required Production Units 1107500 970000 Your answer is partially correct. Try again. Compute the production cost per unit under each plan. (Round answers to 2 decimal places, e.g. 1.25.) Plan A Plan B x Production cost per unit 6.11 6.35 $ $ x Your answer is incorrect. Try again. Compute the gross profit under each plan. Plan A Plan B Gross Profit -342000 962000 $ $ Which plan should be accepted? Plan BV should be accepted