Question

Chap 21 Homework Seved Required information The following information applies to the questions displayed below.) Part 2 of 3 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. points $3,300,000 Skipped 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 ($30,000 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 $ 930,000 225,000 60,000 330,000 180,000 210,000 1.935,000 1,365,000 References 75,000 105,000 235,000 415,000 150,000 241,000 85,000 476,000 $ 474,000 3. The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is

Answer 1

Final Answer Table:

Sales (Units)	$              15,000	$              18,000
Contribution Margin (Per Unit)	$                    125	$                    125
Contribution Margin	$        1,875,000	$        2,250,000 (1)
Fixed Costs	$        1,401,000	$        1,401,000 (2)
Operating Income	$            474,000	$            849,000 (3)

Working Notes:

Classification of Expenses into Variable and Fixed:

Particulars	$	$	Variable/Fixed
Sales		$                3,300,000	Variable
COGS
Direct Materials	$                   930,000		Variable
Direct Labour	$                   225,000		Variable
Machinery Repairs	$                      60,000		Variable
Depreciation Plant	$                   330,000		Fixed
Utilities Fixed	$                   150,000		Fixed
Utilities Variable	$                      30,000		Variable
Plant Management Salaries	$                   210,000	$                1,935,000	Fixed
		$                1,365,000
Selling
Packing	$                      75,000		Variable
Shipping	$                   105,000		Variable
Sales Salary	$                   235,000	$                   415,000	Fixed
General
Advertising Expenses	$                   150,000		Fixed
Salaries	$                   241,000		Fixed
Entertainment Expenses	$                      85,000	$                   476,000	Fixed
Income from Operations		$                   474,000

Calculation for 18,000 Units:

Particulars	15000 Units	15000 Units		$ (Per Unit)	18000 Units	18000 Units
Sales		$                3,300,000		220.00		$                3,960,000
COGS
Direct Materials	$                   930,000		Variable	62.00	$                1,116,000
Direct Labour	$                   225,000		Variable	15.00	$                   270,000
Machinery Repairs	$                      60,000		Variable	4.00	$                      72,000
Utilities Variable	$                      30,000		Variable	2.00	$                      36,000
Packing	$                      75,000		Variable	5.00	$                      90,000
Shipping	$                   105,000	$                1,425,000	Variable	7.00	$                   126,000	$                1,710,000
Contribution		$                1,875,000		125.00		$                2,250,000(1)
Depreciation Plant	$                   330,000		Fixed		$                   330,000
Utilities Fixed	$                   150,000		Fixed		$                   150,000
Plant Management Salaries	$                   210,000		Fixed		$                   210,000
Sales Salary	$                   235,000		Fixed		$                   235,000
Advertising Expenses	$                   150,000		Fixed		$                   150,000
Salaries	$                   241,000		Fixed		$                   241,000
Entertainment Expenses	$                      85,000	$                1,401,000	Fixed		$                      85,000	$                1,401,000 (2)
Net Income		$                   474,000				$                   849,000 (3)

Final Check can be increase in profit = Increase in units * Contribution per unit = 3,000 * 125 = $ 375,000.