Cherokee Manufacturing Company established the following standard price and cost

Question

Cherokee Manufacturing Company established the following standard price and cost data: Sales price $ 12.00 per unit Variable manufacturing cost $ 7.20 per unit Fixed manufacturing cost $ 3,600 total Fixed selling and administrative cost $ 1,200 total Cherokee planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units. Required Prepare the pro forma income statement in contribution format that would appear in a master budget. Prepare the pro forma income statement in contribution format that would appear in a flexible budget.

Explanation / Answer

Prepare the pro forma income statement in contribution format that would appear in a master budget.

Actual units 2200 Sales (2200*12) 26400 Variable manufacturing cost (2200*7.2) -15840 Contribution margin 10560 Fixed manufacturing cost -3600 Fixed selling and administrative expense -1200 -4800 Net operating income 5760

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