Answer:
Pro forma income statement - in a master budget
Sales ($ 8.80×2,200 units) $19,360
Less Cost of Goods sold
Cost of Goods Manufactured
Variable manufacturing cost ( $ 3.30 × 2,200 units) ($7,260)
Contribution $12,100
Less Expenses :
Fixed manufacturing cost ($ 2,300)
Fixed selling and administrative cost ($ 900)
Net Income $8,900
Pro forma income statement - in a flexible budget
Sales ($ 8.80×2,400 units) $21,120
Less Cost of Goods sold
Cost of Goods Manufactured
Variable manufacturing cost ( $ 3.30 × 2,400 units) ($7,920)
Contribution $13,800
Less Expenses :
Fixed manufacturing cost ($ 2,300)
Fixed selling and administrative cost ($ 900)
Net Income $10,600
Explanation:
The master budget is adjusted to match the actual level of output. This is known as flexing the budget.
