Hill industries had sales in 2019 of $6,800,000 and gross profit of $1,100,000. management is considering two alternative budget plans to increase its gross profit in 2020. prepare sales and production budgets and compute cost per unit under two plans. plan a would increase the selling price per unit from $8.00 to $8.40. sales volume would decrease by 10% from its 2019 level. plan b would decrease the selling price per unit by $0.50. the marketing department expects that the sales volume would increase by 100,000 units. at the end of 2019, hill has 40,000 units of inventory on hand. if plan a is accepted, the 2020 ending inventory should be equal to 5% of the 2020 sales. if plan b is accepted, the ending inventory should be equal to 60,000 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 2020 should be $1,895,000. instructions
a. prepare a sales budget for 2020 under each plan.
b. prepare a production budget for 2020 under each plan.
c. compute the production cost per unit under each plan. why is the cost per unit different for each of the two plans? (round to two decimals.) unit cost: plan a $6.88 plan b $6.35
d. which plan should be accepted? (hint: compute the gross profit under each plan.) gross profit: plan a $1,162,800 plan b $1,092,500
Answers: 2
Other questions on the subject: Business
Business, 22.06.2019 01:30, BaileyRyan8320
In the fall, jay thompson decided to live in a university dormitory. he signed a dorm contract under which he was obligated to pay the room rent for the full college year. one clause stated that if he moved out during the year, he could sell his dorm contract to another student who would move into the dormitory as his replacement. the dorm cost was $5000 for the two semesters, which jay had already paid a month after he moved into the dorm, he decided he would prefer to live in an apartment. that week, after some searching for a replacement to fulfill his dorm contract, jay had two offers. one student offered to move in immediately and to pay jay $300 per month for the eight remaining months of the school year. a second student offered to move in the second semester and pay $2500 to jay. jay estimates his food cost per month is $500 if he lives in the dorm and $450 if he lives in an apartment with three other students. his share of the apartment rent and utilities will be $404 per month. assume each semester is 4.5 months long. disregard the small differences in the timing of the disbursements or receipts. what is the cost of the cheapest alternative?
Answers: 1
Business, 22.06.2019 08:00, lizisapenguin
Why do police officers get paid less than professional baseball players?
Answers: 2
Business, 22.06.2019 13:10, littlemoneyh
The textbook defines ethics as “the principles of conduct governing an individual or a group,” and specifically as the standards one uses to decide what their conduct should be. to what extent do you believe that what happened at bp (british petrolium) is as much a breakdown in the company’s ethical systems as it is in its safety systems, and how would you defend your conclusion?
Answers: 2
Business, 22.06.2019 18:00, slycooper99
During the holiday season, maria's department store works with a contracted employment agency to bring extra workers on board to handle overflow business, and extra duties such as wrapping presents. maria's is using during these rush times.
Answers: 3
Do you know the correct answer?
Hill industries had sales in 2019 of $6,800,000 and gross profit of $1,100,000. management is consid...
Questions in other subjects:
Biology, 21.04.2020 02:05
Mathematics, 21.04.2020 02:05
