Question 1 Hill Industries had sales in 2016 of $6,960,000 and gross profit of $

Question

Question 1 Hill Industries had sales in 2016 of $6,960,000 and gross profit of $1,198,000. 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 111,000 units At the end of 2016, Hill 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 72,000 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 $1,508,000. Prepare a sales budget for 2017 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.) HILL INDUSTRIES Sales Budget Plan A Plan B Expected unit sales Unit selling price Total sales LINK TO TEXT Prepare a production budget for 2017 under each plan. HILL INDUSTRIES Production Budget Plan A Plan B LINK TO TEXT

Explanation / Answer

Solution:

Existing sales volume = $6,960,000 / $8 = 870000 units

Gross profit under plan A is higher than gross profit under plan B, therefore Plan A should be accepted.

Sales Budget - Hills Industries - for the period December 31, 2017 Particulars Plan A Plan B Budgeted Sales Units 783000 981000 Selling price $8.40 $7.50 Total Sales $6,577,200.00 $7,357,500.00

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.