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.

Required
1. Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per unit or their amounts for the year, as appropriate.
2. Prepare flexible budgets (see Exhibit 23.3) for the company at sales volumes of 14,000 and 16,000 units.
3. The Company' business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2015 budgeted amount of $159,000 if this level is reached without increasing capacity?
4. An unfavorable change in business is remotely possible; in this case, production and sales volume for 2015 could fall to 12,000 units. How much income (or loss) from operations would occur if sales volume falls to this level?

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PHOENIX COMPANY Flxed Budget Report For Year Ended December 31,2015 Sales $3,000,000 Cost of goods sold Direct labor Machinery repairs (variable cost) Depreciation plant equipment (straight-line) Utilities ($45,000 is variable) Plan ..225,000 60,000 300,000 195,000 t management salaries 200,000 955.000 1,045,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 75,000 05,000 250,000 430,000 General and administrative expenses Advertising expense Salaries 125,000 241,000 90,000 456,000 本 159,000 Entertainment expense. Income from operations