Phoenix Company’s 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. |
Answer:
1
PHOENIX COMPANY |
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Flexible Budget Report |
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For Year Ended December 31, 2015 |
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Flexible Budget |
Flexible Budget |
|||
Variable |
Total |
Units sales |
Units sales |
|
Sales |
200 |
2800000 |
3200000 |
|
Cost of goods sold |
0 |
0 |
||
Direct materials |
63 |
882000 |
1008000 |
|
Direct labor |
14 |
196000 |
224000 |
|
Machinery repairs |
4 |
56000 |
64000 |
|
Utilities |
3 |
42000 |
48000 |
|
Packaging |
6 |
84000 |
96000 |
|
Shipping: |
7 |
98000 |
112000 |
|
Total variable cost |
97 |
1358000 |
1552000 |
|
Contribution margin |
103 |
1442000 |
1648000 |
|
Less: Fixed cost |
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Depreciation |
300,000 |
300,000 |
300,000 |
|
Utilities |
135000 |
135,000 |
135,000 |
|
Plant management salaries |
220,000 |
220,000 |
220,000 |
|
Sales Salary |
235000 |
235,000 |
235,000 |
|
Advertising expense |
125000 |
125,000 |
125,000 |
|
Salaries |
230,000 |
230,000 |
230,000 |
|
Entertainment expense |
80,000 |
80,000 |
80,000 |
|
Total Fixed cost |
1,325,000 |
1,325,000 |
1,325,000 |
|
Income from operations |
117,000 |
323,000 |
2
PHOENIX COMPANY |
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Forecasted Contribution margin income statement |
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For the year ended Dec-31-2015 |
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Possible sales (units) |
15000 |
18000 |
||
Contribution margin per unit |
× 103 |
× 103 |
||
Total contribution margin |
1545000 |
1854000 |
||
Less: Fixed costs |
1,325,000 |
1,325,000 |
||
operating income |
220000 |
529000 |
309000 |
Operating income increase |
3
PHOENIX COMPANY |
||||
Forecasted Contribution margin income statement |
||||
For the year ended Dec-31-2015 |
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Possible sales (units) |
15000 |
12000 |
||
Contribution margin per unit |
× 103 |
× 103 |
||
Total contribution margin |
1545000 |
1236000 |
||
Less: Fixed costs |
1,325,000 |
1,325,000 |
||
operating income (loss) |
220000 |
-89000 |
-309000 |
Operating income decrease |
Working notes for the above answer is as udner
Phoenix Company’s 2015 master budget included the following fixed budget report. It is based on an...
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