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Prepare sales and production budgets and calculate the cost per unit under two plans.
Instructions
Question a. Prepare one sales budget for 2020 under (1) Plan A and (2) Plan B.
Question b. Prepare one production budget for 2020 under (1) Plan A and (2) Plan B.
Question c. Calculate the cost per unit under (1) Plan A and (2) Plan B. Explain why the cost per unit is different for each of the two plans. (Round to two decimals.)
Question d. Which plan should Litwin Industries accept? (Hint: Calculate the gross profit under each plan.)
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