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Waterway Industries had sales in 2021 of $8,504,000 and gross profit of $1,375,000. Management is considering two alternative budget plans to increase its gross profit

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Waterway Industries had sales in 2021 of $8,504,000 and gross profit of $1,375,000. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the unit selling price from $8 to $8.4. Sales volume would decrease by 156,000 units from its 2021 level. Plan B would decrease the unit selling price by $1. The marketing department expects that the sales volume would increase by 163,000 units. At the end of 2021, Waterway has 50,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 44,000 units. If Plan B is accepted, the ending inventory should be equal to 75,000 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 $2,252,500. Prepare a production budget for 2022 under each plan. Compute the production cost per unit under each plan. (Round answers to 2 decimal places, es. 1.25.) Compute the gross profit under each plan. (Round answers to 0 decimal places, e.g. 125.) Which plan should be accepted? should be accepted

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