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Hill Industries had sales in 2019 of $6,800,000 and gross profit of $1,100,000. 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 100,000 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 60,000 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 $1,007,490.

(a)

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Prepare a sales budget for 2020 under each plan. (Round Unit selling price answers to 2 decimal places, e.g. 52.70.)

HILL INDUSTRIES Sales Budget For the Quarter Ending December 31, 2020For the Year Ending December 31, 2020December 31, 2020
		Plan A		Plan B
Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price
Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price		$		$
Direct LaborDirect MaterialsExpected Unit SalesProduction UnitsTotal SalesUnit Selling Price		$		$

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(b)

Prepare a production budget for 2020 under each plan.

HILL INDUSTRIES Production Budget December 31, 2020For the Year Ending December 31, 2020For the Quarter Ending December 31, 2020
		Plan A		Plan B
Desired Ending Direct MaterialsDesired Ending Finished Goods UnitsRequired Production UnitsExpected Unit SalesDirect Materials per UnitTotal Pounds Needed for ProductionBeginning Direct MaterialsBeginning Finished Goods UnitsTotal Materials RequiredTotal Required UnitsDirect Materials Purchases
AddLess: Total Pounds Needed for ProductionDesired Ending Finished Goods UnitsTotal Required UnitsDirect Materials per UnitDesired Ending Direct MaterialsRequired Production UnitsDirect Materials PurchasesExpected Unit SalesBeginning Finished Goods UnitsBeginning Direct MaterialsTotal Materials Required
Total Materials RequiredTotal Required UnitsDirect Materials PurchasesDirect Materials per UnitExpected Unit SalesBeginning Finished Goods UnitsDesired Ending Direct MaterialsTotal Pounds Needed for ProductionRequired Production UnitsDesired Ending Finished Goods UnitsBeginning Direct Materials
AddLess: Total Materials RequiredRequired Production UnitsTotal Required UnitsBeginning Finished Goods UnitsDesired Ending Direct MaterialsTotal Pounds Needed for ProductionDirect Materials PurchasesDesired Ending Finished Goods UnitsDirect Materials per UnitBeginning Direct MaterialsExpected Unit Sales
Desired Ending Finished Goods UnitsDirect Materials per UnitRequired Production UnitsDesired Ending Direct MaterialsBeginning Direct MaterialsExpected Unit SalesTotal Required UnitsBeginning Finished Goods UnitsTotal Pounds Needed for ProductionTotal Materials RequiredDirect Materials Purchases

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