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, 2017

Sales $ 3,000,000

Cost of goods sold

Direct materials $ 945,000

Direct labor 240,000

Machinery repairs (variable cost) 60,000

DepreciationPlant equipment (straight-line) 315,000

Utilities ($30,000 is variable) 195,000

Plant management salaries 220,000 1,975,000

Gross profit 1,025,000

Selling expenses

Packaging 90,000

Shipping 105,000

Sales salary (fixed annual amount) 235,000 430,000

General and administrative expenses

Advertising expense 150,000

Salaries 241,000

Entertainment expense 90,000 481,000

Income from operations $ 114,000

Problem 21-1A Part 3

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