Question

Solomon Manufacturing Company established the following standard price and cost data.

Sales price	$	8.50	per unit
Variable manufacturing cost	$	3.80	per unit
Fixed manufacturing cost	$	2,500	total
Fixed selling and administrative cost	$	900	total

Solomon planned to produce and sell 2,500 units. Actual production and sales amounted to 2,700 units.

Required

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

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

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

	SOLOMON MANUFACTURING COMPANY Pro Forma Income Statement Master Budget 2,500 Units

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

	SOLOMON MANUFACTURING COMPANY Pro Forma Income Statement Flexible Budget 2,700 Units

Answer 1

SOLOMON MANUFACTURING COMPANY Pro Forma Income Statement Flexible Master Budget Budget 2,500 units 2,700 units Sales ($8.50 per unit) 21,250 $ 22,950 Variable manufacturing ($3.80 per unit) 9,500 $ 10,260 Contribution margin 11,750 $ 12,690 Fixed manufacturing 2,500 $ 2,500 Fixed selling and administrative cost 900$ 900 Net income (loss) $ 8,350 $ 9,290