1:03 Chapter 8, Problem 1PSB Tohono Company's 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units. Cost of goods sold Direce labor Machinery airs (wariable cont s variable co) 143 200 27 0 Gros prof Selling expense Packaging Sales salbry (faed annual amoun) General and adnrative expenses Entertainment Income from 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 8.3) for the company at sales volumes of 18,000 and 24,000 units. 3. The company's business conditions are improving. One possible result is a sales volume of 28,000 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 budgetec amount of $125,000 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 14,000 units. How much income (or loss) from operations would occur if sales volume falls to this level? EXHIBIT 8.3 Flexible Budgets Problem Refer to the information in Problem 23-1B. Tohono Company's actual income statement for 2017 follows. 1.2017 $1.64000 Cot of goods sol Drect materials $1,400000 ross prof 20%,000 Required 1. Prepare a flexible budget performance report for 2017 Analysis Component 2. Analyze and interpret both the (a) sales variance and (b) direct materials cost variance. There is no solution to this problem yet. Get help from a Chegg subject expert. Ask an expert