Prepare a production budget for 2022 under each plan. BONITA INDUSTRIES Production Budget Plan A Plan B

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Concept explainers
Question

Subject: accounting 

 

 

 

(b)
Prepare a production budget for 2022 under each plan.
>
BONITA INDUSTRIES
Production Budget
Plan A
Plan B
Transcribed Image Text:(b) Prepare a production budget for 2022 under each plan. > BONITA INDUSTRIES Production Budget Plan A Plan B
Bonita Industries had sales in 2021 of $7,208,000 and gross profit of $1,166,000. Management is considering two alternative budget
plans to increase its gross profit in 2022.
Plan A would increase the unit selling price from $8 to $8.4. Sales volume would decrease by 133,000 units from its 2021 level. Plan B
would decrease the unit selling price by $1. The marketing department expects that the sales volume would increase by 138,000 units.
At the end of 2021, Bonita has 42,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 37,000
units. If Plan B is accepted, the ending inventory should be equal to 64,000 units. Each unit produced will cost $1.50 in direct labor,
$1.30 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2022 should be $2,060,100.
(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.)
Expected Unit Sales
Unit Selling Price
Total Sales
BONITA INDUSTRIES
Sales Budget
For the Year Ending December 31, 2022
69
FA
Plan A
768000
8.40
6,451,200
69
$
69
Plan B
1039000
7
7,273,000
Transcribed Image Text:Bonita Industries had sales in 2021 of $7,208,000 and gross profit of $1,166,000. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the unit selling price from $8 to $8.4. Sales volume would decrease by 133,000 units from its 2021 level. Plan B would decrease the unit selling price by $1. The marketing department expects that the sales volume would increase by 138,000 units. At the end of 2021, Bonita has 42,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 37,000 units. If Plan B is accepted, the ending inventory should be equal to 64,000 units. Each unit produced will cost $1.50 in direct labor, $1.30 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2022 should be $2,060,100. (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.) Expected Unit Sales Unit Selling Price Total Sales BONITA INDUSTRIES Sales Budget For the Year Ending December 31, 2022 69 FA Plan A 768000 8.40 6,451,200 69 $ 69 Plan B 1039000 7 7,273,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education