Campbell 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 $ 3.90 per unit $2,900 total $1,000 total Campbell planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 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.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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