Question

Required information Problem 21-1A Preparation and analysis of a flexible budget LO P1 The following information applies to the questions displayed below.] Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $3,300,000 Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($60,000 is variable) Plant management salarids Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries $930,000 210,000 60,000 315,000 195,000 200,000 1,910,000 1,390,000 90,000 90,000 235,000 415,000 125,000 230,000 Entertainment expense 85,000 440,000 Income from operations $ 535,000

Answer 1

			Flexible Budget		Flexible budget for:
			Variable	total	unit sales	unit sales
			amount pu	fixed cost	14,000	16,000
Sales			220		3080000	3520000
Variable costs
Direct materials			62		868000	992000
direct labor			14		196000	224000
machinery repairs			4		56000	64000
utilities			4		56000	64000
packaging			6		84000	96000
shipping			6		84000	96000
total variable costs			96		1344000	1536000
contribution margin			124		1736000	1984000
Fixed costs
Depreciation - plant Equipment				315,000	315,000	315,000
Utilities				135000	135000	135000
plant management salaries				200,000	200,000	200,000
Sales salary				235,000	235,000	235,000
Advertising				125,000	125,000	125,000
Salaries				230,000	230,000	230,000
Entertainment expense				85,000	85,000	85,000
total fixed cost				1,325,000	1,325,000	1,325,000
income from operations					411,000	659,000
	forecasted Contribution margin income statement
Sales(in units)			15,000	18,000
Contribution margin (per unit)			124	124
Contribution margin.			1860000	2232000
Fixed costs			1,325,000	1,325,000
operating income			535,000	907,000
	forecasted Contribution margin income statement
Sales(in units)			15,000	12,000
Contribution margin (per unit)			124	124
Contribution margin.			1860000	1488000
Fixed costs			1,325,000	1,325,000
operating income			535,000	163,000