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 Cost of goods sold $3,375,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($60,000 is variable) Plant management salaries $900,000 150,000 75,000 300,000 220,000 215,000 1,860,000 1,515,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 90,000 120,000 260,000 470,000 General and administrative expenses Advertising expense Salaries Entertainment expense 125,000 241,000 100,000 466,000 $ 579,000 Income from operations Phoenix Company's actual income statement for 2017 follows PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 $4,098,000 Sales (18,000 units) Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities (fixed cost is $157,500) Plant management salaries $1,097,000 189,000 82,000 300,000 228,750 224,000 2,120,750 1,977,250 Gross profit Selling expenses Packaging Shipping Sales salary (annual) 105,750 136,500 276,000 518,250 General and administrative expenses Advertising expense Salaries Entertainment expense 133,000 241,000 104,000 478,000 $ 981,000 Income from operations Flexible Budget Performance Report For Year Ended December 31, 2017 Flexible Actual esu Variances Fav./ Unfav Sales Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping 900,000 1,080,000 097,000Unfavorable 150,000180,000 189,000Unfavorable 75,000 90,000 82,000 Favorable 60,00072,000 71,250Favorable 90,000108,000 105,750 Favorable 120,000 144,000 36,500Favorable 1,395,000 1,674,000 Fixed costs Depreciation-Plant equipment (straight Utilities Plant management salaries Salaries Advertising expense Sales commissions Entertainment expense No variance line 160000,52,500 Favorable 215000224,000 1250001 100,0001 1,401,000 9,000Unfavorable 260,000276,000 6,000 Unfavorable 33,000 8,000 Unfavorable No variance Unfavorable 2000 241,000 04,000 4,000 Total fixed costs 1,435,500 42,000 Income from operations $ 3,075,000 C $3,117,000