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 $ 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 Company's 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.