Frame U, Inc., which produces picture frames, has the following master budget income statement for the month of December:

The company uses the following estimates to prepare the master budget:
Sales Price...................................................................................... $20 per Unit
Sales and Production Volume....................................................... 16,000 Units
Variable Manufacturing Costs ...................................................... $11 per Unit
Variable Marketing and Administrative Costs................................ $1 per Unit
Fixed Manufacturing Costs .................................................................. $40,000
Fixed Marketing and Administrative Costs........................................... $70,000
Assume that the actual results for December were as follows:
Actual
Sales Price............................................................................................. $22 per Unit
Sales and Production Volume.............................................................. 14,000 Units
Variable Manufacturing Costs .................................................................. $162,000
Variable Marketing and Administrative Costs............................................ $17,000
Fixed Manufacturing Costs ......................................................................... $42,000
Fixed Marketing and Administrative Costs.................................................. $68,000
Compare the master budget, flexible budget, and actual results for the month ofJuly.

Transcribed Image Text:

Master Budget (based on 16,000 units) Sales Revenue (16,000 units at $20) Less 320,000 Variable Manufacturing Costs Variable Marketing and Administrative Costs $176,000a 16,000b $128,000 Contribution Margin Less: Fixed Manufacturing Costs Fixed Marketing and Administrative Costs 40,000 70,000 S 18,000 Operating Profit 16,000 budgeted units at $11 per unit. 16,000 budgeted units at $1 per unit.