Required
Use the information provided in Exercise 15-2.
a. Determine the sales and variable cost volume variances.
b. Classify the variances as favorable (F) or unfavorable (U).
c. Comment on the usefulness of the variances with respect to performance evaluation and identify the member of the management team most likely to be responsible for these variances.
d. Determine the amount of fixed cost that will appear in the flexible budget.
e. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity. Assuming Cherokee uses information in the master budget to price the company’s product, comment on how the fixed cost volume variance could affect the company’s profitability. Round computations to two decimal points.

Data From Exercise 15-2:

Cherokee Manufacturing Company established the following standard price and cost data:

                      

Cherokee 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.