Question

Ch 21 Homework Saved Problem 21-2A Preparation and analysis of a flexible budget performance report LO P1, P2, A1 Phoenix Company's 2017 master budget included the following fowed budget report. It is based on an expected production and sales vc me of 15,000 units. 3.34 points $3,000,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Saler Cost goods sold Direct materials Direct labor Machinery repairs variable cost) Depreciation Plant equipment (straight-line) Utilities ($45,000 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 $975,000 225.000 60.000 300,000 195.000 200.000 0 1.955.000 1.045.000 75.000 105.000 250,000 References 430,000 125.000 241,000 90,000 456,000 159,000 $ Phoenix Company's actual income statement for 2017 follows $3,668,000 PHOENIX CONPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (18.000 units) Cost of goods sold Direct materials $1,185,000 Direct labor 270.000 Machinery repairs (Variable cost) 63.000 Depreciation-Plant equipment straight line) 300.000 Utilities (fixed cost to $167.500) 200, 500 Plant management salaries 210,000 Gross profit Selling expenses Packaging 87.500 Shipping 118,500 Sales salary annual) 268,000 General and administrative expenses Advertising expense 132.000 Salaries Entertainment expense Income from operations 2,236,500 1.011.500 474,000 466,500 471.000

Answer 1

PHOENIX COMPANY
Flexible Budget Performance Report
For Year Ended December 31, 2017
	Flexible Budget	Actual Results	Variances	Fav./Unfav.
Sales	(3000000/15000*18000)= 3600000	$3648000	(3600000-3648000)= 48000	Favorable
Variable costs
Direct labor	(225000/15000*18000)= 270000	278000	(270000-278000)= 8000	Unfavorable
Direct materials	(975000/15000*18000)= 1170000	1185000	(1170000-1185000)= 15000	Unfavorable
Machinery repairs	(60000/15000*18000)= 72000	63000	(72000-63000)= 9000	Favorable
Utilities	(45000/15000*18000)= 54000	(200500-147500)= 53000	(54000-53000)= 1000	Favorable
Shipping	(105000/15000*18000)= 126000	118500	(126000-118500)= 7500	Favorable
Packaging	(75000/15000*18000)= 90000	87500	(90000-87500)= 2500	Favorable
Total variable costs	1782000	1785000	3000	Unfavorable
Contribution margin	1818000	1863000	(1818000-1863000)= 45000	Favorable
Fixed costs
Depreciation- Plant equipment (straight line)	300000	300000	0	No variance
Utilities	(195000-45000)= 150000	147500	(150000-147500)= 2500	Favorable
Plant management salaries	200000	210000	(200000-210000)= 10000	Unfavorable
Sales salary	250000	268000	(250000-268000)= 18000	Unfavorable
Advertising expense	125000	132000	(125000-132000)= 7000	Unfavorable
Salaries	241000	241000	0	No variance
Entertainment expense	90000	93500	(90000-93500)= 3500	Unfavorable
Total fixed costs	1356000	1392000	36000	Unfavorable
Income from operations	$462000	$471000	$9000	Favorable