Phoenix Company\'s 2013 master budget included the following fixed budget report
ID: 2489470 • Letter: P
Question
Phoenix Company's 2013 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2013 3,600,000 Sales Cost of goods sold 1,005,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities ($50,000 is variable) 255,000 90,000 315,000 210,000 200,000 2,075,000 Plant management salaries 1,525,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 75,000 110,000 260,000 445,000 General and administrative expenses Advertising expense Salaries 130,000 241,000 90,000 Entertainment expense 461,000 Income from operations $ 619,000 Phoenix Company's actual income statement for 2013 follows PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2013 4,263,000 Sales (21,000 units) Cost of goods sold 1,189,500 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities (fixed cost is $157,500) 305,500 96,000 315,000 215,083 2,330,083 Plant management salaries 209,000 1,932,917 Gross profit Selling expenses Packagingg Shipping Sales salary (annual) 84,500 120,833 278,000 483,333 General and administrative expenses Advertising expense Salaries 138,000 241,000 93,500 Entertainment expense 472,500 Income from operations $ 977,084Explanation / Answer
Flexible Budget Performance Report for the year ended 2013:
Flexible Budget $ Actual Performance $ Variances F / UF / None Sales 4200000 4263000 63000 F Variable Costs: Direct Materials 1172500 1189500 17000 UF Direct Labor 297500 305500 8000 UF Machinery Repair 105000 96000 9000 F Utilities 58333 57583 750 F Parking 87500 84500 3000 F Shipping 128333 120833 7500 F Total Variable Costs 1849166 1853916 4750 UF Contribution Margin 2350834 2409084 58250 UF Fixed Costs: Depreciation Plant & Machinery 315000 315000 0 None Utilities 160000 157500 2500 F Plant Manager Salary 200000 209000 9000 UF Sales Salary 260000 278000 18000 UF Advertisement 130000 138000 8000 UF Salaries 241000 241000 0 None Entertainment Expense 90000 93500 3500 UF Total Fixed costs 1396000 1432000 36000 UF Income from Operations 954834 977084 22250 F