Sheridan Industries had sales in 2021 of $8,024,000 and gross profit of $1,298,000. Management is...
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Sheridan Industries had sales in 2021 of $8,024,000 and gross profit of $1,298,000. Management is considering two dileridative 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 148,000 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 153,000 units. At the end of 2021, Sheridan has 47,000 units of inventory on hand. If Plan A is accepted, the 2022 ending inventory should be 41,000 units. If Plan B is accepted, the ending inventory should be equal to 71,000 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 $2,292,300. Which plan should be accepted
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