WileyPLUSKimmel, Accounting, 7eHelp I System AnnouncementsCALCULATORPRINTER VERSIONBACKNEXTProblem 22-03A a-b, c1, dHill Industries had sales in 2019 of $7,200,000 and gross profit of $1,158,000.Management is considering two alternative budget plans to increase its grossprofit in 2020.Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volumewould decrease by 10% from its 2019 level. Plan B would decrease the sellingprice per unit by $0.50. The marketing department expects that the sales volumewould increase by 111,000 units.At the end of 2019, Hill has 40,000 units of inventory on hand. If Plan A isaccepted, the 2020 ending inventory should be equal to 5% of the 2020 sales. IfPlan B is accepted, the ending inventory should be equal to 68,000 units. Eachunit 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 $1,507,530.Prepare a sales budget for 2020 under each plan. (Round nit selling priceanswers to 2 decimal places, e.g. 52.70.)HILL INDUSTRIESSales BudgetPlan APlan BPrepare a production budget for 2020 under each plan.HILL INDUSTRIESProduction Budget CALCULATORPRINTER VERSIONBACKNEXTPrepare a production budget for 2020 under each plan.HILL INDUSTRIESProduction BudgetPlan APlan BCompute the production cost per unit under each plan. (Round answers to 2decimal places, e.g. 1.25.)Plan APlan BProduction cost per unit24Compute the gross profit under each plan.Plan APlan BGross Profit24Which plan should be accepted?should be accepted.

Sales budget is defined as the financial plan which states how the resources to be assigned in order…

Hill Industries had sales in 2019 of $7,200,000 and gross profit of $1,158,000. Management is considering two alternative budget plans to increase its gross profit in 2020. 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 111,000 units. At the end of 2019, Hill has 40,000 units of inventory on hand. If Plan A is

Hill Industries had sales in 2019 of $7,200,000 and gross profit of $1,158,000. Management is considering two alternative budget plans to increase its gross profit in 2020. 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 111,000 units. At the end of 2019, Hill has 40,000 units of inventory on hand. If Plan A is

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

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WileyPLUS
Kimmel, Accounting, 7e
Help I System Announcements
CALCULATOR
PRINTER VERSION
BACK
NEXT
Problem 22-03A a-b, c1, d
Hill Industries had sales in 2019 of $7,200,000 and gross profit of $1,158,000.
Management is considering two alternative budget plans to increase its gross
profit in 2020.
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 111,000 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 68,000 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 $1,507,530.
Prepare a sales budget for 2020 under each plan. (Round nit selling price
answers to 2 decimal places, e.g. 52.70.)
HILL INDUSTRIES
Sales Budget
Plan A
Plan B
Prepare a production budget for 2020 under each plan.
HILL INDUSTRIES
Production Budget

CALCULATOR
PRINTER VERSION
BACK
NEXT
Prepare a production budget for 2020 under each plan.
HILL INDUSTRIES
Production Budget
Plan A
Plan B
Compute the production cost per unit under each plan. (Round answers to 2
decimal places, e.g. 1.25.)
Plan A
Plan B
Production cost per unit
24
Compute the gross profit under each plan.
Plan A
Plan B
Gross Profit
24
Which plan should be accepted?
should be accepted.

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