Martinez Industries had sales in 2016 of $7,120,000 and gross profit of $1,121,000. 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 120,000 units. At the end of 2016, Martinez has 48,000 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 61,000 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 $1,108,000. 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.) MARTINEZ INDUSTRIES Sales Budget For the Year Ending December 31, 2017 Plan A Plan B Expected unit sales 801000 1010000 Unit selling price $ 8.40 7.50 Total sales 6728400 $ 7575000 e Textbook and Media Attempts: 1 of 3 used Your answer is correct. Prepare a production budget for 2017 under each plan. MARTINEZ INDUSTRIES Production Budget For the Year Ending December 31, 2017 V Plan A Plan B Expected Unit Sales 801000 1010000 Add Desired Ending Finished Goods Units 40050 61000 Total Required Units 841050 1071000 Less : v: Beginning Finished Goods Units 48000 48000 i Required Production Units 793050 1023000 e Textbook and Media (c) Your answer is correct. 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 $ 5.8 5.48 e Textbook and Media Attempts: 1 of 3 used (d) Your answer is partially correct. Compute the gross profit under each plan. Plan A Plan B Gross Profit $ 2096000 2023000 Which plan should be accepted? Plan A should be accepted. e Textbook and Media Save for Later Attempts: 2 of 3 used Submit