Chapter 23A

Trico Company set the following standard unit costs for its single product.

Phoenix Company's 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units. $4,050,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cost of goods sold Direct materials $900,000 Direct labor 180,000 Machinery repairs (variable cost) 72,000 Depreciation-Plant equipment (straight-line) 315,000 Utilities ($54,000 is variable) 204,000 Plant management salaries 230,000 Gross profit Selling expenses Packaging 90,000 Shipping 126,000 Sales salary (fixed annual amount) 250,000 General and administrative expenses Advertising expense 134,000 Salaries 251,000 Entertainment expense 100,000 Income from operations 1,901,000 2,149,000 466,000 485,000 $1,198,000 Phoenix Company's actual income statement for 2019 follows. $4,788,000 PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019 Sales (21,000 units) Cost of goods sold Direct materials $1,066,000 Direct labor 218,000 Machinery repairs (variable cost) 75,000 Depreciation-Plant equipment (straight-line) 315,000 Utilities (fixed cost is $147,000) 209,000 Plant management salaries 241,000 Gross profit Selling expenses Packaging 102,250 Shipping 139,500 Sales salary (annual) 266,000 General and administrative expenses Advertising expense 142,000 Salaries 251,000 Entertainment expense 104,000 Income from operations 2,124,000 2,664,000 507,750 497,000 $1,659, 250 Required: 1. Prepare a flexible budget performance report for 2019. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.) PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2019 Actual Flexible Budget Results $ 250 Variances Fav./Unfav. Sales Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping Total variable costs Contribution margin Fixed costs Depreciation-Plant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense Salaries Entertainment expense expense 0 0 Total fixed costs Income from operations