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Flexible budget planning holding a planning session for Executive officers of Freedonia Seafood Processing Company are fiscal year 2019. They have already established the following
Flexible budget planning holding a planning session for Executive officers of Freedonia Seafood Processing Company are fiscal year 2019. They have already established the following standard price and costs for their canned seafood product: Standard price and variable costs Price per can Materials cost 7.20 2.40 1.44 Labor cost 0.20 0.50 Overhead cost Selling, general, and administrative costs Expected fixed costs Production facility costs Selling, general, and administrative costs 400,000 $480,000 Required Prepare the pro forma income statement that would appear in the master budget if the a. cans of seafood in 2019. company expects to produce 600,000 b. A marketing consultant suggests to Freedonia's president that the product's price may affect the number of cans the company can sell. According to the consultant's analysis, if the firm sets its price at $6.70, it could sell 810,000 budget based on the consultant's suggestion. cans of seafood. Prepare a flexible c. The same consultant also suggests that if the company raises its price the volume of sales would decline to 400,000. Prepare a flexible budget based on this suggestion. to $7.70 per can, d. Evaluate the three possible outcomes developed in Requirements a, b, and c and recommend a pricing strategy
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