Question

Need help with the following accounting problem.

Problem 23-2A Preparation and analysis of a flexible budget performance report LO P1, P2, A1 Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units. $3,400,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials $1,105,000 Direct labor 255,000 Machinery repairs (variable cost) 34,000 Depreciation-Plant equipment (straight-line) 300,000 Utilities ($17,000 is variable) 167,000 Plant management salaries 215,000 Gross profit Selling expenses Packaging 51,000 Shipping 85,000 Sales salary (fixed annual amount) 260,000 General and administrative expenses Advertising expense 131,000 Salaries 251,000 Entertainment expense 90,000 Income from operations 2,076,000 1,324,000 396,000 472,000 $ 456,000

Answer 1

Flexible budget performance report
							flexible	actual	Varianace	fav/unfav
							budget	results
Sales			(3400000/17000)*20000				4000000	4,078,000	78,000	F
Variable costs
Direct materials			(1105000/17000)*20000				1300000	1,315,000	15,000	U
direct labor			(255000/17000)*20000				300000	309,000	9,000	U
machinery repairs			(34000/17000)*20000				40000	31,000	9,000	F
utilities			(17000/17000)*20000				20000	19000	1,000	F
packaging			(51000/17000)*20000				60000	58,000	2,000	F
shipping			(85000/17000)*20000				100000	92,500	7,500	F
total variable costs							1820000	1824500	4,500	U
contribution margin							2180000	2253500	73,500	F
Fixed costs									0
Depreciation - plant Equipment							300,000	315,000	15,000	N
Utilities							150000	147,500	2,500	F
plant management salaries							215,000	225,000	10,000	U
Sales salary							260,000	276,000	16,000	U
Advertising							131,000	139,000	8,000	U
Salaries							251,000	251,000	0	N
Entertainment expense							90,000	93,500	3,500	U
total fixed cost							1,397,000	1,447,000	50,000	U
income from operations							783,000	806,500	23,500	F