Erick Manufacturing Company Established the Following Standard Price and Cost

question 72

Essay

Erick Manufacturing Company established the following standard price and cost information: $$\begin{array} { | l | r | } \hline \text { Sales price } & \$ 50 \text { per unit } \\\hline \text { Variable manufacturing cost } & \$ 32 \text { per unit } \\\hline \text { Fixed manufacturing cost } & \$ 100,000 \text { total } \\\hline \text { Fixed selling and administrative cost } & \$ 40,000 \text { total } \\\hline\end{array}$$
Erick expected to produce and sell 10,000 units. Actual production and sales amounted to 9,500 units.
Required:
a) Prepare the pro forma income statement in contribution format that would appear in Erick's master budget for the year (based on the planned level of activity).
b) Prepare the pro forma income statement in contribution format that would appear in Erick's flexible budget (based on the actual level of activity).

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