Truebody Food Corporation developed the following standard price and costs for a refrigerated TV dinner that the company produces.
Standard price and variable costs per unit
Sales price .................. $6.75
Materials cost ................ 2.00
Labor cost .................. 0.75
Overhead cost ............... 0.15
Selling, general, and administrative costs ..... 0.40
Planned fixed costs
Manufacturing overhead cost ......... $200,000
Selling, general, and administrative costs ..... 120,000

Required
a. Prepare the pro forma income statement that would appear in the master budget.
b. Prepare flexible budget income statements, assuming production and sales volumes of 360,000 and 440,000 units.
c. Determine the sales and variable cost volume variances, assuming volume is actually 380,000 units.
d. Indicate whether the variances are favorable (F) or unfavorable (U).
e. Comment on how Truebody could use the variances to evaluate performance.