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. $3,000,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($60,000 is variable) plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations $ 945,000 225,000 45,000 315,000 195,000 190,000 1,915,000 1,885,000 90,000 105,000 235,000 430,000 150,000 230,000 75,000 455,000 200,000 $ Problem 21-1A Part 1&2

Answer 1

Solution 1 and 2:

Phoenix Company Flexible Budget for 2017 Flexible Budget Flexible Budget For Particulars Variable amount per unit Total Fixed Cost Volume - 14000 units Volume - 16000 units $200.00 $2,800,000.00 $3,200,000.00 9 10 11 12 $63.00 $15.00 $3.00 $4.00 $6.00 $7.00 $98.00 $102.00 $882,000.00 $210,000.00 $42,000.00 $56,000.00 $84,000.00 $98,000.00 $1,372,000.00 $1,428,000.00 $1,008,000.00 $240,000.00 $48,000.00 $64,000.00 $96,000.00 $112,000.00 $1,568,000.00 $1,632,000.00 13 Sales Variable costs: Direct materials Direct labor Machinery repairs Utilities Packaging Shipping Total Variable costs Contribution margin Fixed Costs: Depreciation-Plant equipment Utilities Plant management salaries Sales Salaries Advertising expense Salaries Entertainment expense Total Fixed Costs Net Operating Income 17 18 19 20 21 $315,000.00 $135,000.00 $190,000.00 $235,000.00 $150,000.00 $230,000.00 $75,000.00 $1,330,000.00 $315,000.00 $135,000.00 $190,000.00 $235,000.00 $150,000.00 $230,000.00 $75,000.00 $1,330,000.00 $98,000.00 $315,000.00 $135,000.00 $190,000.00 $235,000.00 $150,000.00 $230,000.00 $75,000.00 $1,330,000.00 $302,000.00 23 24 27 28 29 30 31 32 35 36 37 38 39 40 43 44 45 47 48 49 313409 ) senses -574 (6) Sheet765 ) ge ts out on Cristo Sheet766 Sheet36 (26) Sheet595 (3)

Solution 3 and 4:

Sales (In units) Contribution margin per unit Contribution margin Fixed costs Operating income (Loss) Phoenix Company Forecasted contribution margin income statement For the year ended December 31, 2017 15000 18000 $102.00 $102.00 $1,530,000.00 $1,836,000.00 $1,330,000.00 $1,330,000.00 $200,000.00 $506,000.00 $306,000.00 Operating Income Increase 24 25 Phoenix Company Forecasted contribution margin income statement For the year ended December 31, 2017 Sales (In units) 15000 12000 Contribution margin per unit $102.00 $102.00 Contribution margin $1,530,000.00 $1,224,000.00 Fixed costs $1,330,000.00 $1,330,000.00 Operating income (Loss) $200,000.00 -$106,000.00 29 30 54 55. -574 (6) ) Sheet765 ) Sheet766 Sheet36 (26) Sheet595 (3)