Phoenix Companys 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 16,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017
Sales				$	3,200,000
Cost of goods sold
Direct materials	$	880,000
Direct labor		160,000
Machinery repairs (variable cost)		48,000
DepreciationPlant equipment (straight-line)		315,000
Utilities ($32,000 is variable)		182,000
Plant management salaries		230,000			1,815,000
Gross profit					1,385,000
Selling expenses
Packaging		64,000
Shipping		96,000
Sales salary (fixed annual amount)		250,000			410,000
General and administrative expenses
Advertising expense		126,000
Salaries		241,000
Entertainment expense		100,000			467,000
Income from operations				$	508,000

Phoenix Companys actual income statement for 2017 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017
Sales (19,000 units)				$	3,878,000
Cost of goods sold
Direct materials	$	1,061,000
Direct labor		199,000
Machinery repairs (variable cost)		49,000
DepreciationPlant equipment (straight-line)		315,000
Utilities (fixed cost is $147,500)		184,750
Plant management salaries		241,000			2,049,750
Gross profit					1,828,250
Selling expenses
Packaging		73,750
Shipping		106,500
Sales salary (annual)		268,000			448,250
General and administrative expenses
Advertising expense		134,000
Salaries		241,000
Entertainment expense		103,500			478,500
Income from operations				$	901,500

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	$3,200,000	$3,878,000	$678,000	Favorable
Variable costs
Direct materials	880,000	1,061,000	181,000
Direct labor	0	199,000	0
Machinery repairs	0	49,000	0
Utilities	0	0	0
Packaging	0	73,750	0
Shipping	0	106,500	0
Total variable costs	880,000	1,489,250	609,250
Contribution margin	0		0
Fixed costs
DepreciationPlant equipment (straight-line)	315,000	315,000	0	No variance
Utilities	150,000	147,500	2,500	Favorable
Plant management salaries	230,000	241,000	11,000	Unfavorable
Sales salary	250,000	268,000	18,000	Unfavorable
Advertising expense	126,000	134,000	8,000	Unfavorable
Salaries	241,000	241,000	0	No variance
Entertainment expense	100,000	103,500	3,500	Unfavorable
Total fixed costs	1,412,000	1,450,000	38,000
Income from operations	0	$901,500

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Required information

[The following information applies to the questions displayed below.] Alvarez Companys output for the current period yields a $21,000 favorable overhead volume variance and a $61,800 unfavorable overhead controllable variance. Standard overhead applied to production for the period is $224,000.

Alvarez records standard costs in its accounts. Prepare the journal entry to charge overhead costs to the Work in Process Inventory account and to record any variances.

Journal entry worksheet

Record overhead applied to production and overhead variances.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1	Work in process inventory	224,000
	Controllable variance	61,800
	Volume variance		21,000
	Factory overhead		264,800

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Farad, Inc., specializes in selling used SUVs. During the month, the dealership sold 50 trucks at an average price of $9,500 each. The budget for the month was to sell 46 trucks at an average price of $10,000 each. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Compute the dealerships sales price variance and sales volume variance for the month

Actual Sales			-25000	Flexible Budget			40000	Budgeted Sales
AQ	x	AP		AQ	x	SP		SQ	x	SP
50	x	$9,500		50	x	$10,000		46	x	$10,000
	$475,000				$500,000				$460,000
			$25,000	15000			$40,000
Sales price variance				25,000	Favor or Unfavor
Sales volume variance				40,000	Favor or Unfavor
Total sales variance				0	Favor or Unfavor