Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $4,500,000 Cost of goods sold Direct materials $1,080,000 270,000 Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($54,000 is variable) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses 72,000 330,000 204,000 2,171,000 2,329,000 215,000 90,000 126,000 250,000 466,000 Advertising expense 127,000 261,000 Salaries Entertainment expense 488,000 100,000 Income from operations $1,375,000 Phoenix Company's actual income statement for 2017 follows. PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (21,000 units) Cost of goods sold $5,328,000 Direct materials $1,277,000 322,000 76,000 330,000 209,750 224,000 Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities (fixed cost is $147,500) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (annual) General and administrative expenses Advertising expense Salaries Entertainment expense 2,438,750 2,889,250 102,500 139,500 266,000 508,000 135,000 261,000 499,500 103,500 Income from operations $1,881,750 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. Variable costs Fixed costs