Pebco Company's 2011 master budget included the following fixed budget report. It is based on an expected production and sales volume of 16,000 units. PEBCO COMPANY Fixed Budget Report For Year Ended December 31, 2011 Sales Cost of goods sold $3,600,000 $1,005,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities ($50,000 is variable) Plant management salaries 255,000 60,000 300,000 210,000 230,000 2,060,000 1,540,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 75,000 110,000 270,000 2 455,000 General and administrative expenses Advertising expense Salaries 130,000 261,000 100,000 491,000 Entertainment expense 594,000 Income from operations Pebco Company's actual income statement for 2011 follows. PEBCO COMPANY Statement of Income from Operations For Year Ended December 31, 2011 $4,338,000 Sales (19,000 units) Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment Utilities (fixed cost is $158,000) Plant management salaries $1,208,438 310,813 62,250 300,000 216,875 240,000 2,338,376 Gross profit Selling expenses 1,999,624 Packaging Shipping Sales salary (annual) 86,063 122,625 288,000 496,688 General and administrative expenses Advertising expense Salaries Entertainment expense 139,000 261,000 103,500 503,500 Income from operations $ 999,436 U fort dollar the effect of each variance by Input all a Results