Phoenix Company\'s 2015 master budget included the following fixed budget report
ID: 2544856 • Letter: P
Question
Phoenix Company's 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANY Fxed Budget Report For Year Ended December 31, 2015 S 3,000,000 Sales Cost of goods sold $ 975.000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment (straight-line) Utilities ($45,000 is variable) Plant management salaries 225,000 45,000 300,000 195,000 190,000 1,930,000 Gross profit Selling expenses 1,070,000 Packaging Shipping Sales salary (fixed annual amount) 90,000 05,000 235,000 430,000 General and administrative expenses Advertising expense Salaries Entertainment expense 150,000 230,000 85,000 465,000 Income from operations $ 175,000Explanation / Answer
Flexible Budget Flexible Budget for Per unti working Per Unit Cost total Fixed Cost Unit sale of 14000 Unit sale of 16000 Variable Cost Per unit*14000 Per unit*16000 975000/15000 Direct Material 65 910000 1040000 225000/15000 Direct Labor 15 210000 240000 45000/15000 Machinery Repair 3 42000 48000 45000/15000 Utilities 3 42000 48000 90000/15000 Packaging 6 84000 96000 105000/15000 Shipping 7 98000 112000 Total 99 1386000 1584000 Fixed Cost Depreciation 300000 300000 300000 Utilities (195000-45000) 150000 150000 150000 Plant Management Salary 190000 190000 190000 Packaging 0 0 Shipping 0 0 Sales salary 235000 235000 235000 Advertising 150000 150000 150000 Salaries 230000 230000 230000 Entertainment 85000 85000 85000 Total Fixed Cost 1340000 1340000 Total Cost 2726000 2924000 Expected Increase Expected fall Sales Unit 15000 18000 Sales Unit 15000 12000 Contribution Margin per unit 101 101 Contribution Margin per unit 101 101 Total Margin (Unit*per unit) 1515000 1818000 303000 Total Margin (Unit*per unit) 1515000 1212000 -303000 Less Fixed Cost Less Fixed Cost Depreciation 300000 300000 0 Depreciation 300000 300000 0 Utilities (195000-45000) 150000 150000 0 Utilities (195000-45000) 150000 150000 0 Plant Management Salary 190000 190000 0 Plant Management Salary 190000 190000 0 Sales salary 235000 235000 0 Sales salary 235000 235000 0 Advertising 150000 150000 0 Advertising 150000 150000 0 Salaries 230000 230000 0 Salaries 230000 230000 0 Entertainment 85000 85000 0 Entertainment 85000 85000 0 Packaging-variable 0 Packaging-variable 0 Shipping-variable 0 Shipping-variable 0 Expected Increase in Income 303000 Expected fall in Income -303000 at15000 Per Unit Selling Price 3000000 200 Variable Product Cost Direct Material 975000 65 Direct Labor 225000 15 Machinery Repair 45000 3 Utilities 45000 3 Packaging 90000 6 Shipping 105000 7 Contribution Margin 1515000 101