Gibson Manufacturing Company established the following stand

Gibson Manufacturing Company established the following standard price and cost data. Sales price Variable manufacturing cost Fixed manufacturing cost Fixed selling and administrative cost $8.00 per unit $ 3.00 per unit $2,500 total $ 700 total Gibson planned to produce and sell 2,200 units. Actual production and sales amounted to 2,400 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. Required A Required B Prepare the pro forma income statement in contribution format that would appear in a master budget. GIBSON MANUFACTURING COMPANY Pro Forma Income Statement Master Budget 2,200 Units

Solution

Answer a. GIBSON MANUFACTURING COMPANY Pro Forma Income Statement Master Budget 2,200 Units Sales - 2,200 Units X $8                       17,600 Less: Variable Costs Variable Manufacturing Costs - 2,200 Units X $3                          6,600 Contribution Margin                       11,000 Less: Fixed Costs Fixed Manufacturing Cost                          2,500 Fixed Selling & Admnistrative Cost                             700 Total Fixed Costs                          3,200 Net Operating Income                          7,800 Answer b. GIBSON MANUFACTURING COMPANY Pro Forma Income Statement Flexible Budget 2,400 Units Sales - 2,400 Units X $8                       19,200 Less: Variable Costs Variable Manufacturing Costs - 2,400 Units X $3                          7,200 Contribution Margin                       12,000 Less: Fixed Costs Fixed Manufacturing Cost                          2,500 Fixed Selling & Admnistrative Cost                             700 Total Fixed Costs                          3,200 Net Operating Income                          8,800