3. Phoenix Companys 2013 master budget included the following fixed budget report. It is based on an expected production and sales volume of 16,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2013

Sales				$	3,200,000
Cost of goods sold
Direct materials	$	990,000
Direct labor		255,000
Machinery repairs (variable cost)		60,000
Depreciationplant equipment		300,000
Utilities ($50,000 is variable)		200,000
Plant management salaries		230,000			2,035,000
Gross profit					1,165,000
Selling expenses
Packaging		85,000
Shipping		115,000
Sales salary (fixed annual amount)		250,000			450,000
General and administrative expenses
Advertising expense		126,000
Salaries		261,000
Entertainment expense		110,000			497,000
Income from operations				$	218,000

Phoenix Companys actual income statement for 2013 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2013

Sales (19,000 units)				$	3,863,000
Cost of goods sold
Direct materials	$	1,191,625
Direct labor		310,813
Machinery repairs (variable cost)		62,250
Depreciationplant equipment		300,000
Utilities (fixed cost is $147,500)		206,125
Plant management salaries		240,000			2,310,813
Gross profit					1,552,187
Selling expenses
Packaging		98,188
Shipping		129,563
Sales salary (annual)		268,000			495,751
General and administrative expenses
Advertising expense		135,000
Salaries		261,000
Entertainment expense		113,000			509,000
Income from operations				$	547,436