Phoenix Companys 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017
Sales				$	3,000,000
Cost of goods sold
Direct materials	$	975,000
Direct labor		225,000
Machinery repairs (variable cost)		60,000
DepreciationPlant equipment (straight-line)		300,000
Utilities ($45,000 is variable)		195,000
Plant management salaries		200,000			1,955,000
Gross profit					1,045,000
Selling expenses
Packaging		75,000
Shipping		105,000
Sales salary (fixed annual amount)		250,000			430,000
General and administrative expenses
Advertising expense		125,000
Salaries		241,000
Entertainment expense		90,000			456,000
Income from operations				$	159,000

Phoenix Companys actual income statement for 2017 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017
Sales (18,000 units)				$	3,648,000
Cost of goods sold
Direct materials	$	1,185,000
Direct labor		278,000
Machinery repairs (variable cost)		63,000
DepreciationPlant equipment (straight-line)		300,000
Utilities (fixed cost is $147,500)		200,500
Plant management salaries		210,000			2,236,500
Gross profit					1,411,500
Selling expenses
Packaging		87,500
Shipping		118,500
Sales salary (annual)		268,000			474,000
General and administrative expenses
Advertising expense		132,000
Salaries		241,000
Entertainment expense		93,500			466,500
Income from operations				$	471,000

Required: 1. Prepare a flexible budget performance report for 2017 PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2017 Flexible Budget Actual Results $ 3,648,000 Variances Fav. / Unfav. Favorable Sales Variable costs Direct materials Direct labor Machinery repairs I 1,185,000 278,000 63,000 53,000 87,500 118,500 Unfavorable Unfavorable Favorable Favorable Favorable Favorable Utilities Packaging Shipping 0 1,785,000 Total variable costs Contribution margin Fixed costs Depreciation-Plant equipment (straight-line) Utilities Plant management salaries Salaries 300,000 147,500 210,000 241,000 268,000 132,000 93,500 No variance Favorable Unfavorable No variance Unfavorable Unfavorable Unfavorable Sales salary Advertising expense Entertainment expense 0 1,392,000 Total fixed costs Income from operations Unfavorable Favorable