### Carla Vista Industries Budget Plans for 2022**Current Attempt in Progress**Carla Vista Industries had sales in 2021 of $6,528,000 and a gross profit of $1,056,000. Management is considering two alternative budget plans to increase its gross profit in 2022.#### Plan A- **Increase in Selling Price:** From $8.00 to $8.40 per unit.- **Effect on Sales Volume:** Decrease by 120,000 units from its 2021 level.#### Plan B- **Decrease in Selling Price:** By $0.50 per unit.- **Effect on Sales Volume:** Increase by 124,800 units according to the marketing department's expectations.#### Inventory and Cost Details- At the end of 2021, Carla Vista has 40,000 units of inventory on hand.- If **Plan A** is accepted, the 2022 ending inventory should be 36,000 units.- If **Plan B** is accepted, the ending inventory should be 64,000 units.- Each unit produced will cost: - $1.50 in direct labor - $1.30 in direct materials - $1.20 in variable overhead- The fixed overhead for 2022 is projected to be $1,820,000.### Instruction for Problem-SolvingPrepare a sales budget for 2022 under each plan. *(Round Unit selling price answers to 2 decimal places, e.g., 52.70.)*##### Note:The text provided does not include any graphs or diagrams needing detailed explanations.---This structured outline provides a clear and concise summary of the budget plans and related details, aiding users in understanding Carla Vista Industries' financial strategy for 2022.

The sales budget is the one that is prepared to determine the amount to be received in the future…

Answered: (a) Your answer is correct. Prepare a…

(a) Your answer is correct. Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.

Question

### Carla Vista Industries Budget Plans for 2022

**Current Attempt in Progress**

Carla Vista Industries had sales in 2021 of $6,528,000 and a gross profit of $1,056,000. Management is considering two alternative budget plans to increase its gross profit in 2022.

#### Plan A
- **Increase in Selling Price:** From $8.00 to $8.40 per unit.
- **Effect on Sales Volume:** Decrease by 120,000 units from its 2021 level.

#### Plan B
- **Decrease in Selling Price:** By $0.50 per unit.
- **Effect on Sales Volume:** Increase by 124,800 units according to the marketing department's expectations.

#### Inventory and Cost Details
- At the end of 2021, Carla Vista has 40,000 units of inventory on hand.
- If **Plan A** is accepted, the 2022 ending inventory should be 36,000 units.
- If **Plan B** is accepted, the ending inventory should be 64,000 units.
- Each unit produced will cost:
- $1.50 in direct labor
- $1.30 in direct materials
- $1.20 in variable overhead
- The fixed overhead for 2022 is projected to be $1,820,000.

### Instruction for Problem-Solving
Prepare a sales budget for 2022 under each plan. *(Round Unit selling price answers to 2 decimal places, e.g., 52.70.)*

##### Note:
The text provided does not include any graphs or diagrams needing detailed explanations.

---

This structured outline provides a clear and concise summary of the budget plans and related details, aiding users in understanding Carla Vista Industries' financial strategy for 2022.

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