Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 16,000 units. $4,000,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials $880,000 Direct labor 160,000 Machinery repairs (variable cost) 48,000 Depreciation-Plant equipment (straight-line) 315,000 Utilities ($32,000 is variable) 192,000 Plant management salaries 230,000 Gross profit Selling expenses Packaging 64,000 Shipping 96,000 Sales salary (fixed annual amount) 260,000 General and administrative expenses Advertising expense 127,000 Salaries 261,000 Entertainment expense 100,000 Income from operations 1,825,000 2,175,000 420,000 488,000 $1,267,000 Phoenix Company's actual income statement for 2017 follows. $4,813,000 PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (19,000 units) Cost of goods sold Direct materials $1,060,000 Direct labor 199,000 Machinery repairs (variable cost) 48,000 Depreciation-Plant equipment (straight-line) 315,000 Utilities (fixed cost is $157,500) 194,750 Plant management salaries 239,000 Gross profit Selling expenses Packaging 73,500 Shipping 106,500 Sales salary (annual) 278,000 General and administrative expenses Advertising expense 136,000 Salaries 261,000 Entertainment expense 103,000 Income from operations 2,055,750 2,757,250 458,000 500,000 $1,799,250 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 Variances Fav. / Unfav. Sales $ 4,813,000 Favorable Variable costs Direct materials Direct labor Machinery repairs Packaging Shipping 0 0 Fixed costs DepreciationPlant equipment (straight-line) Plant management salaries Fixed costs DepreciationPlant equipment (straight-line) Plant management salaries Sales salary Utilities Advertising expense Salaries 0 0