Sandhill Industries had sales in 2021 of $8,160,000 and gross profit of $1,320,000. 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 150,000 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 156,000 units. At the end of 2021, Sandhill has 52,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 48,000 units. If Plan B is accepted, the ending inventory should be equal to 88,000 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 $2,276,000.

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 production cost per unit in dollars rounded to 2 decimal places		$enter production cost per unit in dollars rounded to 2 decimal places

(d)

Compute the gross profit under each plan.

		Plan A		Plan B
Gross Profit		$enter gross profit in dollars		$enter gross profit in dollars

Which plan should be accepted?

select a plan Plan APlan B should be accepted.