Sheridan Industries had sales in 2021 of $6,256,000 and gross profit of $1,012,000. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 115,000 units from its 2021 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by 119,600 units. At the end of 2021, Sheridan has 38,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 34, units. If Plan B is accepted, the ending inventory should be equal to 60,000 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 $1,744,000. (a) Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)
Sheridan Industries had sales in 2021 of $6,256,000 and gross profit of $1,012,000. Management is considering two alternative budget plans to increase its gross profit in 2022. Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 115,000 units from its 2021 level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increase by 119,600 units. At the end of 2021, Sheridan has 38,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 34, units. If Plan B is accepted, the ending inventory should be equal to 60,000 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 $1,744,000. (a) Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Sheridan Industries had sales in 2021 of $6,256,000 and gross profit of $1,012,000. Management is considering two alternative
budget plans to increase its gross profit in 2022.
Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 115,000 units from its 2021
level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would
increase by 119,600 units.
At the end of 2021, Sheridan has 38,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 34,00
units. If Plan B is accepted, the ending inventory should be equal to 60,000 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 $1,744,000.
(a)
Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)
SHERIDAN INDUSTRIES
Sales Budget
Plan A
S
Plan B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb6a5005c-859b-46db-a47b-33f1bc648c90%2F959a28e7-3c3e-47d8-a1b6-33813ea1476a%2Fo500p5h_processed.png&w=3840&q=75)
Transcribed Image Text:Sheridan Industries had sales in 2021 of $6,256,000 and gross profit of $1,012,000. Management is considering two alternative
budget plans to increase its gross profit in 2022.
Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 115,000 units from its 2021
level. Plan B would decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would
increase by 119,600 units.
At the end of 2021, Sheridan has 38,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 34,00
units. If Plan B is accepted, the ending inventory should be equal to 60,000 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 $1,744,000.
(a)
Prepare a sales budget for 2022 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)
SHERIDAN INDUSTRIES
Sales Budget
Plan A
S
Plan B
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