You are on a strategic planning committee at Griffin Industries. Griffin reported the following for the year ended December 31, 2020 based on 600,000 units sold. Griffin Industries Income Statement (partial) for the year ended December 31, 2020 Sales revenue Cost of goods sold Gross profit $5,400,000 4,450,000 $950,000 Management is considering two alternative pricing strategies to increase its gross profit in 2021. Instructions In the "Your Solutions" tab of this worksheet, prepare the following: 1. A 2021 sales budget for each proposal. 2. A 2021 production budget for each proposal. 3. A 2021 budgeted partial income statement in the same format as the one shown above. Note that you will need to calculate cost per unit in 2021 to determine budgeted cost of goods sold. 4. A short memo explaining which proposal you recommend and why. If you prefer, you may prepare this in a separate .doc file and attach it with your assignment. Your solution should use formulas and cell references instead of keyed in values where possible. Your production budget, for example, should use a unit sales number pulled from your sales budget instead of a keyed in unit sales amount. In addition to being a graded element of this assignment, good practices in Excel will make this assignment both easier and less subject to error. Proposal 1 - Price Increase This course of action has been proposed because the Director of Sales believes that our product is underpriced, and that the market would mostly absorb a price hike. The proposal calls for an average price increase of $0.46 per unit. The marketing department estimates that the increase would reduce demand for our product by 41,000 units. Proposal 2 - Price Reduction The Chief Operating Officer has proposed that an increase in volume that would result from more competitive pricing would allow Griffin to spread its considerable fixed costs over more units and cut its per-unit costs. The proposal calls for a $0.61 reduction in unit sales price, which would result in an estimated 74,500 increase in unit sales. Production Outlook Griffin has 40,000 units of finished goods inventory on hand at December 31, 2020. If Proposal 1 is implemented, Griffin plans to reduce inventory levels, with 2021 ending inventory equal to 5% of 2021 unit sales. If Proposal 2 is implemented, Griffin intends to increase finished goods on hand to 49,000 units at 2021 year end. Cost Estimates The following cost estimates have been developed for 2020. Direct materials: $2.32 per unit, direct labor: $1.29 per unit, variable overhead: $0.92 per unit. Fixed overhead is estimated to be $1,725,000 for 2021