Phoenix Company\'s 2017 master budget included the following fixed budget report
ID: 2582305 • Letter: P
Question
Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 $3,300,000 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($45,000 is variable) Plant management salaries $960,000 225,000 60,000 315,000 180,000 180,000 1, 920,000 1,380,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 90,000 90,000 235,000 415,000 General and administrative expenses Advertising expense Salaries Entertainment expense 125,000 241,000 80,000 446,000 $519,000 Income from operationsExplanation / Answer
1&2 Flexible budget report Flexible budget Flexible budget for: Variable amount per unit Total fixed cost 14000 units 16000 units Sales 220 3080000 3520000 (3300000/15000) Variable costs Direct materials 64 896000 1024000 (960000/15000) Direct labor 15 210000 240000 (225000/15000) Mahinery repairs 4 56000 64000 (60000/15000) Utilities 3 42000 48000 (45000/15000) Packaging 6 84000 96000 (90000/15000) Shipping 6 84000 96000 (90000/15000) Total 98 1372000 1568000 Fixed costs: Depreciation-plant equipment 315000 315000 315000 Utilities 135000 135000 135000 (180000-45000) Plant management salaries 180000 180000 180000 Sales salary 235000 235000 235000 Advertising expense 125000 125000 125000 Salaries 241000 241000 241000 Entertainment expenses 80000 80000 80000 Total 1311000 1311000 1311000 3 Forecasted contribution margin income statement Sales (in units) 15000 18000 Contribution margin (per unit) (Sales-variable cost=220-98) 122 122 Contribution margin 1830000 2196000 Fixed cost 1311000 1311000 Operating income 519000 885000 366000 Increase in operating income=366000 4 Forecasted contribution margin income statement Sales (in units) 15000 12000 Contribution margin (per unit) (Sales-variable cost=220-98) 122 122 Contribution margin 1830000 1464000 Fixed cost 1311000 1311000 Operating income 519000 153000 -366000 Decrease in operating income=366000