Phoenix Company reports the following fixed budget. It is based on an expected production and sales volume of 15,000 units.

PHOENIX COMPANY
Fixed Budget
For Year Ended December 31
Sales	$ 3,000,000
Costs
Direct materials	975,000
Direct labor	225,000
Sales staff commissions	60,000
DepreciationMachinery	300,000
Supervisory salaries	200,000
Shipping	225,000
Sales staff salaries (fixed annual amount)	250,000
Administrative salaries	411,000
DepreciationOffice equipment	195,000
Income	$ 159,000

Required: 1&2. Prepare flexible budgets at sales volumes of 14,000 and 16,000 units. 3. The companys business conditions are improving. One possible result is a sales volume of 18,000 units. Prepare a simple budgeted income statement if 18,000 units are sold.

Prepare flexible budgets at sales volumes of 14,000 and 16,000 units.

PHOENIX COMPANY
Flexible Budgets
For Year Ended December 31
	Flexible Budget		Flexible Budget for:
	Variable Amount per Unit	Total Fixed Cost	Units Sales of 14,000	Unit Sales of 16,000
Sales	$200.00	$0.00	$2,800,000	$3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labor	15.00		210,000	240,000
Sales staff commissions	4.00		56,000	64,000
Shipping	15.00		210,000	240,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	$101.00		1,414,000	1,616,000
Fixed costs
DepreciationOffice equipment		195,000	195,000	195,000
Administrative salaries		411,000	411,000	411,000
Sales staff salaries		250,000	250,000	250,000
Supervisory salaries		200,000	200,000	200,000
DepreciationMachinery		300,000	300,000	300,000
Total fixed costs		$1,356,000	$1,356,000	$1,356,000
Income			$58,000	$260,000

The companys business conditions are improving. One possible result is a sales volume of 18,000 units. Prepare a simple budgeted income statement if 18,000 units are sold.

PHOENIX COMPANY
Budgeted Income Statement
For Year Ended December 31
Sales (in units)	18,000
Sales
Less: Variable cost
Contribution margin
Less: Fixed cost
Income	$0