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 | $ | 3,000,000 | |||
Cost of goods sold | |||||
Direct materials | $ | 945,000 | |||
Direct labor | 240,000 | ||||
Machinery repairs (variable cost) | 60,000 | ||||
Depreciation—Plant equipment (straight-line) | 315,000 | ||||
Utilities ($30,000 is variable) | 195,000 | ||||
Plant management salaries | 220,000 | 1,975,000 | |||
Gross profit | 1,025,000 | ||||
Selling expenses | |||||
Packaging | 90,000 | ||||
Shipping | 105,000 | ||||
Sales salary (fixed annual amount) | 235,000 | 430,000 | |||
General and administrative expenses | |||||
Advertising expense | 150,000 | ||||
Salaries | 241,000 | ||||
Entertainment expense | 90,000 | 481,000 | |||
Income from operations | $ | 114,000 | |||
Problem 21-1A Part 3
3. The company’s business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2017 budgeted amount of $114,000 if this level is reached without increasing capacity?
PHOENIX COMPANY | |||||||
working | |||||||
For Year Ended December 31, 2017 | |||||||
Units U | 15000 | 18000 | units | ||||
Divide amount/units | Variable V | Fixed F | V*18000+f | ||||
Sales | 200 | 3,000,000 | 3600000 | ||||
Cost of goods sold | |||||||
Direct materials | 63 | 945,000 | 1134000 | ||||
Direct labor | 16 | 240,000 | 288000 | ||||
Machinery repairs (variable cost) | 4 | 60,000 | 72000 | ||||
Depreciation—Plant equipment (straight-line) | 315,000 | 315,000 | 315000 | ||||
Utilities ($30,000 is variable) | 2 | 165,000 | 195,000 | 201000 | |||
Plant management salaries | 220,000 | 220,000 | 1,975,000 | 220000 | 2230000 | ||
Gross profit | 1,025,000 | 1370000 | |||||
Selling expenses | |||||||
Packaging | 6 | 90,000 | 108000 | ||||
Shipping | 7 | 105,000 | 126000 | ||||
Sales salary (fixed annual amount) | 235,000 | 235,000 | 430,000 | 235000 | 469000 | ||
General and administrative expenses | |||||||
Advertising expense | 150,000 | 150,000 | 150000 | ||||
Salaries | 241,000 | 241,000 | 241000 | ||||
Entertainment expense | 90,000 | 90,000 | 481,000 | 90000 | 481000 | ||
Income from operations | 114,000 | 420000 | |||||
Increase in income is (420000-114000) | 306,000 | answer |
Phoenix Company’s 2017 master budget included the following fixed budget report. It is based on an...
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 $ 3,000,000 Cost of goods sold Direct materials $ 945,000 Direct labor 240,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 315,000 Utilities ($30,000 is variable) 195,000 Plant management salaries 220,000 1,975,000 Gross profit 1,025,000 Selling expenses Packaging 90,000 Shipping 105,000 Sales salary (fixed...
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 $ 3,000,000 Cost of goods sold Direct materials $ 945,000 Direct labor 240,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 315,000 Utilities ($30,000 is variable) 195,000 Plant management salaries 220,000 1,975,000 Gross profit 1,025,000 Selling expenses Packaging 90,000 Shipping 105,000 Sales salary (fixed...
Phoenix Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $ 4,500,000 Cost of goods sold Direct materials $ 1,170,000 Direct labor 360,000 Machinery repairs (variable cost) 36,000 Depreciation—Plant equipment (straight-line) 315,000 Utilities ($18,000 is variable) 168,000 Plant management salaries 230,000 2,279,000 Gross profit 2,221,000 Selling expenses Packaging 54,000 Shipping 90,000 Sales salary (fixed...
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 $ 3,000,000 Cost of goods sold Direct materials $ 915,000 Direct labor 210,000 Machinery repairs (variable cost) 45,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($60,000 is variable) 180,000 Plant management salaries 190,000 1,840,000 Gross profit 1,160,000 Selling expenses Packaging 75,000 Shipping 90,000 Sales salary (fixed...
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 $ 3,150,000 Cost of goods sold Direct materials $ 900,000 Direct labor 210,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 190,000 1,855,000 Gross profit 1,295,000 Selling expenses Packaging 75,000 Shipping 90,000 Sales salary (fixed...
Phoenix Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $ 4,500,000 Cost of goods sold Direct materials $ 1,170,000 Direct labor 180,000 Machinery repairs (variable cost) 90,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($72,000 is variable) 222,000 Plant management salaries 215,000 2,177,000 Gross profit 2,323,000 Selling expenses Packaging 108,000 Shipping 144,000 Sales salary (fixed...
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 $ 3,150,000 Cost of goods sold Direct materials $ 915,000 Direct labor 210,000 Machinery repairs (variable cost) 45,000 Depreciation—Plant equipment (straight-line) 330,000 Utilities ($60,000 is variable) 195,000 Plant management salaries 200,000 1,895,000 Gross profit 1,255,000 Selling expenses Packaging 75,000 Shipping 105,000 Sales salary (fixed...
Phoenix Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units. Phoenix Company’s actual income statement for 2017 follows. Required: 1. Prepare a flexible budget performance report for 2017. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $4,250,000 Cost of goods sold Direct materials $1,020,000 Direct labor 170,000 51,000 330,000 184,000 215,000 Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($34, 000 is...
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. $3,300,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials $930,000 Direct labor 210,000 Machinery repairs (variable cost) 45,000 Depreciation-Plant equipment (straight-line) 300,000 Utilities ($30,000 is variable) 195,000 Plant management malaries 180,000 Gross profit Selling expenses Packaging 90,000 Shipping 105,000 Sales salary (fixed annual amount) 235,000 General...
Phoenix Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units. Phoenix Company’s actual income statement for 2017 follows. $4,250,000 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 ($34,000 is variable) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and...