Pebco Company's 2011 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units PEBCO COMPANY Fixed Budget Report For Year Ended December 31, 2011 $4,250,000 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities ($55,000 is variable) Plant management salaries $ 990,000 225,000 90,000 315,000 215,000 230,000 2,065,000 Gross proft Selling expenses 2,185,000 Packaging Shipping Sales salary (fixed annual amount) 85,000 115,000 270,000 470,000 General and administrative expenses Advertising expense Salaries 131,000 251,000 90,000 Entertainment expense 472,000 Income from operations $1,243,000 Pebco Company's actual income statement for 2011 follows PEBCO COMPANY Statement of Income from Operations For Year Ended December 31, 2011 Sales (20,000 units) Cost of goods sold $5,078,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities (fixed cost is $157,500) Plant management salaries $1,181,706 272,706 96,882 315,000 221,206 239,000 2,326,500 Gross profit Selling expenses 2,751,500 Packaging 97,500 Pebco Company's actual income statement for 2011 follows PEBCO COMPANY Statement of Income from Operations For Year Ended December 31, 2011 Sales (20,000 units) Cost of goods sold $5,078,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities (fixed cost is $157,500) Plant management salaries $1,181,706 272,706 96,882 315,000 221,206 239,000 2,326,500 Gross proft Selling expenses 2,751,500 Packaging Shipping Sales salary (annual) 97,500 127,294 287,000 511,794 General and administrative expenses Advertising expense Salaries 139,000 251,000 93,500 Entertainment expense 483,500 Income from operations $ 1,756,206 Required 1. Prepare a flexible budget performance report for 2011. (Do not round your intermediate calculations and round your final answers to nearest dollar amount. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank be certain to enter "O" wherever required. Omit the "$" sign in your response.) Required 1. Prepare a flexible budget performance report for 2011. (Do not round your intermediate calculations and round your final answers to nearest dollar amount. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank be certain to enter "O" wherever required. Omit the "$" sign in your response.) PEBCO COMPANY Flexible Budget Performance Report For Year Ended December 31, 2011 Flexible Budget Actual Results Variances Sales Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping Total variable costs Contribution margin Fixed costs Depreciation-plant equipment Utilities Plant management salaries Sales salary Advertising expense Salaries Entertainment expense None None Total fixed costs Inc ome from operations