Question

Required information Problem 08-1A Preparing and analyzing a flexible budget LO P1, A1 [The following information applies to the questions displayed below) Phoenix Company's 2019 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, 2019 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) utilities (545,000 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 5960,000 220,000 60,000 315,000 210,000 210,000 1,965,000 2,335,000 90,000 105,000 235,00 430,000 125,000 230,000 75,000 430, ce $ Problem 08-1A Part 1&2 475,000 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 foced. PHOENIX COMPANY Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Variable Amount Total Fixed per Unit Cost 210 00 Flexible Budget for Units Sales Unit Sales of of 14.000 16.000 $ 2940.000 $ 3.200.000 896,000 1,024 000 PION

Answer 1

	PHOENIX COMPANY
	Fixed Budget Report
	For Year Ended December 31, 2019
	Flexible Budget		Flexible Budget for:
	Variable Amount per Unit	Total Fixed Cost	Units Sales of 14,000	Unit Sales of 16,000
Sales	220		3080000	3520000
Variable costs:
Direct materials	64		896000	1024000
Direct labor	14		196000	224000
Machinery repairs	4		56000	64000
Utilities	3		42000	48000
Packaging	6		84000	96000
Shipping	7		98000	112000
Total variable costs	98		1372000	1568000
Contribution margin	122		1708000	1952000
Fixed costs
Depreciation—Plant equipment (straight-line)		315000	315000	315000
Advertising expense		125000	125000	125000
Entertainment expense		75000	75000	75000
Plant management salaries		210000	210000	210000
Utilities		165000	165000	165000
Sales salary		235000	235000	235000
Salaries		230000	230000	230000
Total fixed costs		1355000	1355000	1355000
Income from operations			353000	597000
3
Forecasted Contribution Margin Income Statement
For Year ended December 31,2019
Sales (in units)	15000	18000
Contribution margin (per unit)	122	122
Contribution margin	1830000	2196000
Fixed costs	1355000	1355000
Operating income	475000	841000	366000	Operating income increase
4
Forecasted Contribution Margin Income Statement
For Year ended December 31,2019
Sales (in units)	15000	12000
Contribution margin (per unit)	122	122
Contribution margin	1830000	1464000
Fixed costs	1355000	1355000
Operating income(loss)	475000	109000