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. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 $3,150,000 $960,000 225.000 45.000 300,000 195.000 180,000 1,905,000 1.225.000 Cost of 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 90,000 90.000 235,000 415,000 150,000 241,000 75,000 466,000 364,000 $

Answer 1

4
Forecasted Contribution Margin Income Statement
For the Year ended December 31,2017
Sales(in units)	15000	12000
Contribution margin(per unit)	113	113
Contribution margin	1695000	1356000
Fixed costs	1331000	1331000
Operating income(loss)	364000	25000
Workings:
	Variable Amount per Unit	Total Fixed Cost
Sales	210
Variable costs:
Direct materials	64
Direct labor	15
Machinery repairs	3
Utilities	3
Packaging	6
Shipping	6
Total variable costs	97
Contribution margin	113
Fixed costs
Depreciation—Plant equipment (straight-line)		300000
Advertising expense		150000
Entertainment expense		75000
Plant management salaries		180000
Utilities		150000
Sales salary		235000
Salaries		241000
Total fixed costs		1331000