Phoenix Company's 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. $3,300,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cont of goods sold Direct materials $915,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation-plant equipment (straight-line) 315,000 Utilities ($60,000 is variable) 195,000 Plant management salaries 190,000 Gross profit Selling expenses Packaging 90,000 Shipping 90,000 Sales salary (fixed annual amount) 235,000 General and administrative expenses Advertising expense 125,000 Salaries 230,000 Entertainment expense 90.000 Income from operations 1.900,000 1.400.000 415,000 445,000 $ 540,000 Required: 182. Prepare flexible budgets for the company at sales volumes of 14,000 and 16,000 units and classify all items listed in the fixed budget as variable or fixed, PHOENIX COMPANY Flexible Budgets PHOENIX COMPANY Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Variable Amount Total Fixed Cost Flexible Budget for: Units Sales Unit Sales of of 14,000 16,000 per Unit Variable costs Fixed costs Required information per Unit Cost of 14,000 16,000 Variable costs Fixed costs Seved Help Save & Exit Submit } $915,000 225.000 60,000 315.000 195,000 190,000 1.900.000 1,400,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation Plant equipment (straight-line) Utilities ($60,000 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 90,000 90,000 235,000 415,000 55:50 125,000 230,000 90.000 445.000 $540,000 3. The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the budgeted amount of $540,000 if this level is reached without increasing capacity? PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 Sales in units) 15.000 18.000 Contribution margin (per unit) Contribution margin Fbced costs Operating Income Help Save & Exit $3,300,000 $915,000 225,000 60,000 315,000 195,000 190,000 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cont) Depreciation-plant equipment (straight-line) Utilities ($60,000 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 1,900,000 1,400,000 90,000 90,000 235,000 415.000 125,000 230,000 90,000 445,000 $ 540,000 4. An unfavorable change in business is remotely possible in this case, production and sales volume for the year could fall to 12,000 units. How much income for loss) from operations would occur if sales volume falls to this lovel? (Enter any loss with minus sign.) PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (in units) 15.000 12.000 Contribution margin (per unit) Contribution margin Foxed costs Operating income (oss)
