Phoenix Company's 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, 2017Sales$3,000,000Cost of goods soldDirect materials$945,000Direct labor240,000Machinery repairs (variable cost)60,000DepreciationPlant equipment (straight-line)315,000Utilities ($30,000 is variable)195,000Plant management salaries220,0001,975,000Gross profit1,025,000Selling expensesPackaging90,000Shipping105,000Sales salary (fixed annual amount)235,000430,000General and administrative expensesAdvertising expense150,000Salaries241,000Entertainment expense90,000481,000Income from operations$114,000

Problem 21-1A Part 3

The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2017 budgeted amount of $114,000 if this level is reached without increasing capacity?

PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (in units) 15,000 18,000 Contribution margin (per unit) Contribution margin Fixed costs Operating income