A 1 of 1 + Automatic Zoom 1020 Chapter 23 Flexible Budgets and Standard Costs Midterm Project connect PROBLEM SET A Phoenix Company's 2015 master budget included the following fixed budget report. It is based on Expected production and sales volume of 15,000 units. Problem 23-1A Preparation and analysis of a flexible budget P1 Midten get Page 1 of 1 Sales'...... PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2015 $3,000,000 Cost of goods sold Direct materials. $975,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation plant equipment (straight-line). 300,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 200,000 1,955,000 Gross profit.. 1,045.000 Selling expenses Packaging.. 75,000 Shipping.. 105,000 Sales salary (foved annual amount) 250,000 430,000 General and administrative expenses Advertish expense 125,000 Salaries 241,000 Entertainment expense 90.000 Income from operations. 456,000 $ 159,000 Check (2) Budgeted income at 16,000 units, $260,000 (4) Potential operating loss, S(144,000) Problem 23-2A Preparation and analysis of a flexible budget performance report P1 P2 A1 Required 1. Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per uni 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 unit 3. The company's 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 ca pacity. How much would operating income increase over the 2015 budgeted amount of $159,000 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 vol ume falls to this level? Refer to the information in Problem 23-1A. Phoenix Company's actual income statement for 2015 follows PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2015 Sales (18,000 unles). Cost of goods sold Direct materials. Direct labor Machinery repairs (vible cost) Depreciation-plant equipmen Utilities (food cost is $147.500) $1,185,000 278,000 63,000 300,000 200500 $3,648,000