Phoenix Company\'s 2015 master budget included the following fixed budget report
ID: 2557772 • 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 17,000 units. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2015 Sales Cost of goods sold 3,400,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment (straight-line) Utilities ($51 ,000 is variable) Plant management salaries $ 1,190,000 255,000 68,000 330 ,000 211,000 200,000 2254,000 Gross profit Selling expenses 1,146,000 Packaging Shipping Sales salary (ixed annual amount) 85,000 119,000 260,000 464,000 General and administrative expenses Advertising expense Salaries Entertainment expense 135,000 251,000 90,000 476,000 Income from operations S 206,000 Phoenix Company's actual income statement for 2015 follows. PHOEN COMPANY Statement of Income from Operations For Year Ended December 31, 2015 Sales (20,000 units) Cost of goods sold $ 4,063,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment (straight-line) 330,000 Utilities (fixed cost is $157 500) $1416,000 309,000 72,000 217,000Explanation / Answer
PHOENIX COMPANY Flexible budget performance Report For the Year Ended Dec 31, 2015 Flexible Budget Actual Budget Variance Fav/UnFav Sales(20,000) = $3400000/17000 x 20000 $4,000,000.00 $4,063,000.00 $63,000.00 F Variable costs: Direct materials $1,400,000.00 $1,416,000.00 $16,000.00 U Direct labor $300,000.00 $309,000.00 $9,000.00 U Machinery repairs (variable cost) $80,000.00 $72,000.00 $8,000.00 F Utilities ($51,000/17000 x 20000) $60,000.00 $59,500.00 $500.00 F Packaging $100,000.00 $97,000.00 $3,000.00 F Shiping $140,000.00 $133,000.00 $7,000.00 F Total variable costs $2,080,000.00 $2,086,500.00 $6,500.00 U Contribution Margin $1,920,000.00 $1,976,500.00 $56,500.00 F Fixed costs Depreciation—plant equipment $330,000.00 $330,000.00 $0.00 Utilities $160,000.00 $157,500.00 $2,500.00 F Plant management salaries $200,000.00 $211,000.00 $11,000.00 U Sales salary $260,000.00 $277,000.00 $17,000.00 U Advertising expense $135,000.00 $143,000.00 $8,000.00 U Salaries $251,000.00 $251,000.00 $0.00 Entertainment expense $90,000.00 $93,000.00 $3,000.00 U Total fixed costs $1,426,000.00 $1,462,500.00 $36,500.00 U Income from operations $494,000.00 $514,000.00 $20,000.00 F