Once you have determined the fixed and variable components, Prepare a flexible budget for 18,000 units in a contribution margin format.
apter 23 Flexible Budgets and Standard Costs en connect budget report. It is based on Denix Company's 2017 master budget included the following fixed budget re pected production and sales volume of 15,000 units. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 $3,000,000 $975,000 225,000 60,000 300,000 195.000 200.000 1.955.000 1,045,000 Sales .... Cost of goods sold Direct materials .. Direct labor...... Machinery repairs (variable cost).......... Depreciation-Plant equipment (straight-line).... Utilities ($45,000 is variable) ..... Plant management salaries ...... Gross profit..... Selling expenses Packaging..... Shipping ...... Sales salary (oved annual amount) General and administrative expenses Advertising expense..... Salaries.................. Entertainment expense............ Income from operations 75,000 105,000 250.000 430,000 125,000 241.000 90.000 456,000 $ 159,000 determine their amounts per uired Classify all items listed in the fixed budget as variable or fixed. Also determin or their amounts for the year, as appropriate. Prepare flexible budgets (see Exhibit 23.3) for the company at sales volumes o The company's business conditions are improving. One possible resu 18,000 units. The company president is confident that this volume is within ang capacity How umes of 14.000 and 16.000 le result is a sales volume the relevant range of SUSRA so determine their amount ed ssify all items listed in the fixed budget as variable or fixed. Also d heir amounts for the year, as appropriate. pare flexible budgets (see Exhibit 23.3) for the company at sales volumes of e company's business conditions are improving. One possible resul 000 units. The company president is confident that this volume is within capacity. How much would operating income increase over the 2017 bu mis level is reached without increasing capacity? unfavorable change in business is remotely possible; in this case, production 7 could fall to 12,000 units. How much income (or loss) from operations would e falls to this level? nes of 14.000 and 16/ result is a sales volum within the relevant range of 2017 budgeted amount of $159 oduction and sales volume ions would occur if sales the information in Problem 23-1A. Phoenix Company's actual income statement for PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 $3,648,000 $1,185,000 278,000 63,000 300,000 200.500 210,000 2.236,500 1,411,500 Sales (18,000 units)... Cost of goods sold Direct materials ... ............... Direct labor............. Machinery repairs (variable cost) ............ Depreciation-Plant equipment ............ Utilities (fixed cost is $147.500) ............ Plant management salaries................ Gross profit......... Selling expenses Packaging.............. Shipping ................... Sales salary (annual) ................ General and administrative expenses Advertising expense Salaries...... Entertainment expense........ Income from operations ........ 87,500 118,500 268,000 474,000 132,000 241.000 93,500 466,500 $ 471.000
