Vernon Manufacturing Company established the following standard price and cost d

Question

Vernon Manufacturing Company established the following standard price and cost data. Sales price Variable manufacturing cost Fixed manufacturing cost Fixed selling and administrative cost $ 9.00 per unit 3.20 per unit $2,000 total $ 900 total Vernon planned to produce and sell 2,800 units. Actual production and sales amounted to 3,100 units. Required a. Prepare the pro forma income statement in contribution format that would appear in a master budget b. Prepare the pro forma income statement in contribution format that would appear in a flexible budget.

Explanation / Answer

Master budget 2800 units Sales 25200 =2800*9 Variable manufacturing 8960 =2800*3.2 Contribution margin 16240 Fixed manufacturing 2000 Fixed selling and administrative 900 Net income 13340 Flexible budget 3100 units Sales 27900 =3100*9 Variable manufacturing 9920 =3100*3.2 Contribution margin 17980 Fixed manufacturing 2000 Fixed selling and administrative 900 Net income 15080

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