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Phoenix Companys 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units. Phoenix

Phoenix Companys 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units.

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Phoenix Companys actual income statement for 2017 follows.

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$4,250,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($34,000 is variable) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations $1,020,000 170,000 51,000 330,000 184,000 215,000 1,970,000 2,280,000 68,000 102,000 270,000 440,000 131,000 241,000 90,000 462,000 $1,378,000 $5,063,000 PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (20,000 units) Cost of goods sold Direct materials $1,217,000 Direct labor 208,000 Machinery repairs (variable cost) 51,000 Depreciation-Plant equipment (straight-line) 330,000 Utilities (fixed cost is $147,500) 187,000 Plant management salaries 224,000 Gross profit Selling expenses Packaging 77,750 Shipping 112,500 Sales salary (annual) 288,000 General and administrative expenses Advertising expense 139,000 Salaries 241,000 Entertainment expense 94,000 Income from operations 2,217,000 2,846,000 478,250 474,000 $1,893,750 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. I I I Sales Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping 0 01 I Total variable costs Contribution margin I Fixed costs DepreciationPlant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense I Salaries Entertainment expense L I Total fixed costs o Income from operations

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