1&2. Prepare flexible budgets for the company at sale volumes of 14,000 and 16,000 units and classify all items listed in the fixed budget as variable or fixed.

3. The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2017 budget amount of $295,000 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 2017 could fall to 12,000 units. How much income (or loss) from operations would occur if sales volume falls to this level? (Enter any loss with minus sign.)

Required information [The following information applies to the questions displayed below. 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 $3,150,000 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($60,000 is variable) Plant management salaries $960,000 225,000 60,000 330,000 195,000 190,000 1,960,000 1,190,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 90,000 105,000 235,000 430,000 General and administrative expenses Advertising expense Salaries Entertainment expense 150,000 230,000 85,000 465,000 $ 295, 000 Income from operations