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Zachary Manufacturing Company established the following standard price and cost

ID: 2520161 • Letter: Z

Question

Zachary Manufacturing Company established the following standard price and cost data. Sales price Variable manufacturing cost Fixed manufacturing cost Fixed selling and administrative cost $ 8.50 per unit $ 3.40 per unit $2,400 total 600 total Zachary planned to produce and sell 2,900 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. Complete this question by entering your answers in the tabs below.

Explanation / Answer

ZACHARY MANUFACTURING COMPANY

Pro Forma Income statement

Master Budget

2,900 Units

Sales    ( 2,900* 8.50)

24,650

Less: Variable manufacturing cost (2,900*3.40)

(9,860)

Contribution margin

14,790

Less: Fixed manufacturing cost

( 2,400)

Less: fixed selling and administrative cost

(600)

Net Profit

11,790

ZACHARY MANUFACTURING COMPANY

Pro Forma Income statement

Flexible Budget

3,100 Units

Sales    ( 3,100* 8.50)

26,350

Less: Variable manufacturing cost (3,100*3.40)

(10,540)

Contribution margin

15,815

Less: Fixed manufacturing cost

( 2,400)

Less: fixed selling and administrative cost

(600)

Net Profit

12,810

Master Budget

2,900 Units

Sales    ( 2,900* 8.50)

24,650

Less: Variable manufacturing cost (2,900*3.40)

(9,860)

Contribution margin

14,790

Less: Fixed manufacturing cost

( 2,400)

Less: fixed selling and administrative cost

(600)

Net Profit

11,790