Question

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 ($30,880 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 $ 930,000 240,000 45,000 33e, eee 210,080 180,000 1.935,000 1,865,000 75,000 90,000 235,000 400,000 125,000 241,000 80,000 446,000 S. 219,900 Required: 182. Prepare flexible budgets for the company at sales volumes of 14.000 and 16.000 units and classify all items listed in the fixed budget as variable or fixed.

Answer 1

PHOENIX COMPANY Fixed Budget Report For year Ended December 31, 2017 Flexible Budget Flexible Budget For Variable Amount per unit Total Fixed Costs Units sales of 14000 Unit sales of 16000

Sales 200 2800000 3200000 Variable costs: Direct materials Direct labor Machine repairs Utilities Packaging Shipping 62 868000 992000 224000 16 256000 3 42000 48000 2 28000 32000 5 70000 80000 6 84000 96000 Total Variable costs 94 1316000 1504000 Contribution margin 1484000 1696000 106 Fixed costs: Depreciation Plant equipment 330000 330000 330000 Utilities 180000 180000 180000 Plant management salaries Sales salary Advertising Salaries 180000 180000 180000 235000 235000 235000 125000 125000 125000 241000 241000 241000 Enterainment expense 80000 80000 80000 Total Fixed costs Income from operations 1371000 1371000 1371000 113000 325000