Problem 21-3A (Part Level Submission) Hill Industries had sales in 2016 of $7,52
ID: 2510414 • Letter: P
Question
Problem 21-3A (Part Level Submission) Hill Industries had sales in 2016 of $7,520,000 and gross profit of $1,204,000. Management is considering tw?elternetive 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% f om its 2016 el Plan B would decrease the selling price per unit by 30.50. The At the end of 2016, Hil, has 42,000 units of inventory on hand. If Plan A is accepted the 2017 end ng ventory should be equal to 5% of the 2017 sales IFPI B is accepted, the e marketing departm ent expects that the sales volume would increase by 117,000 units. inve ending inventory should be equal to 71,000 units Each unit produced wil cost?1.80 in direct 1.40 in direct materials, and?1.20 in variable overhead. The fixed overhead for 2017 should be $1,649,000 for 2017 s labor, Prepare a sales budget for 20 17 under each plan. (Round Unit selling price answers to 2 decimal places,e.g. 52.70) Sales Budget Expected unit sales Unit selling price s Total sales Attempts: O of 3 usedExplanation / Answer
Plan A
Expected units sales = Sales unit in 2016 - 10% decrease
= ($7,520,000/$8) - 10% decrease
= 940,000 units - 10% decrease
= 940,000 units - 94,000 units
= 846,000 units
Unit selling price = $8.40 per unit
Total sales value = Units sold * Unit selling price
= 846,000 units * $8.40 per unit
= $7,106,400
Plan B
Expected units sales = Sales unit in 2016 + 117,000 units
= ($7,520,000/$8) + 117,000 units
= 940,000 units + 117,000 units
= 1,057,000 units
Unit selling price = $8 per unit - $0.50 per unit = $7.50 per unit
Total sales value = Units sold * Unit selling price
= 1,057,000 units * $7.50 per unit
= $7,927,500
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