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Sandhill Industries had sales in 2021 of $6,664,000 and gross profit of $1,078,000. 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 122,500 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 127,400 units. At the end of 2021, Sandhill has 41,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 37,000 units. If Plan B is accepted, the ending inventory should be equal to 66,000 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 $1,858,000.

(a)

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Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)

SANDHILL INDUSTRIES Sales 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 sales budget item Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price		enter a number of units		enter a number of units
select a sales budget item Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price		$enter a dollar amount		$enter a dollar amount
select a closing sales budget item Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price		$enter a total dollar amount		$enter a total dollar amount

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(b)

Prepare a production budget for 2022 under each plan.

SANDHILL 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 Desired Ending Finished Goods UnitsTotal Materials RequiredTotal Required UnitsBeginning Finished Goods UnitsExpected Unit SalesTotal Pounds Needed for ProductionDirect Materials PurchasesBeginning Direct MaterialsDirect Materials per UnitRequired Production 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 Direct Materials PurchasesDesired Ending Direct MaterialsDirect Materials per UnitDesired Ending Finished Goods UnitsExpected Unit SalesRequired Production UnitsBeginning Finished Goods UnitsBeginning Direct MaterialsTotal Required UnitsTotal Pounds Needed for ProductionTotal Materials Required		enter a number of units		enter a number of units
select a summarizing line for the first part Beginning Finished Goods UnitsDesired Ending Finished Goods UnitsTotal Materials RequiredExpected Unit SalesTotal Pounds Needed for ProductionRequired Production UnitsDesired Ending Direct MaterialsTotal Required UnitsDirect Materials per UnitBeginning Direct MaterialsDirect Materials Purchases		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 Required Production UnitsTotal Materials RequiredDesired Ending Finished Goods UnitsDirect Materials per UnitBeginning Finished Goods UnitsTotal Pounds Needed for ProductionTotal Required UnitsBeginning Direct MaterialsDirect Materials PurchasesExpected Unit SalesDesired Ending Direct Materials		enter a number of units		enter a number of units
select a closing production budget item Direct Materials PurchasesTotal Materials RequiredBeginning Finished Goods UnitsExpected Unit SalesDesired Ending Finished Goods UnitsDesired Ending Direct MaterialsDirect Materials per UnitBeginning Direct MaterialsRequired Production UnitsTotal Required UnitsTotal Pounds Needed for Production		enter a total number of units		enter a total number of units

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

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(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.