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. $3,150,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials $960,000 Direct labor 225,000 Machinery repairs (variable cost) 45,000 Depreciation-Plant equipment (straight-line) 300,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 180,000 Gross profit Selling expenses Packaging 90,000 Shipping 90,000 Sales salary (fixed annual amount) 235,000 General and administrative expenses Advertising expense 150,000 Salaries 241,000 Entertainment expense 75,000 Income from operations 1,905,000 1,245,000 415,000 466,000 364,000

Answer 1

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

Sales 210 2940000 3360000 Variable costs: Direct materials Direct labor Machine repairs Utilities Packaging Shipping 896000 64 1024000 15 210000 240000 42000 3 48000 3 42000 48000 96000 84000 6 84000 96000 Total Variable costs 1552000 97 1358000 Contribution margin 1808000 113 1582000 Fixed costs: Depreciation Plant equipment 300000 300000 300000 Utilities 150000 150000 150000 Plant management salaries Sales salary Advertising Salaries Enterainment expense 180000 180000 180000 235000 235000 235000 150000 150000 150000 241000 241000 241000 75000 75000 75000 Total Fixed costs Income from oprations 1331000 1331000 1331000 251000 477000