Phoenix Companys 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019Sales $4,250,000Cost of goods sold Direct materials$935,000 Direct labor 340,000 Machinery repairs (variable cost) 68,000 DepreciationPlant equipment (straight-line) 315,000 Utilities ($51,000 is variable) 211,000 Plant management salaries 215,000 2,084,000Gross profit 2,166,000Selling expenses Packaging 85,000 Shipping 119,000 Sales salary (fixed annual amount) 260,000 464,000General and administrative expenses Advertising expense 127,000 Salaries 241,000 Entertainment expense 100,000 468,000Income from operations $1,234,000

Phoenix Companys actual income statement for 2019 follows.

PHOENIX COMPANY

Statement of Income from Operations For Year Ended December 31, 2019Sales (20,000 units) $5,063,000Cost of goods sold Direct materials$1,117,000 Direct labor 408,000 Machinery repairs (variable cost) 72,000 DepreciationPlant equipment (straight-line) 315,000 Utilities (fixed cost is $158,000) 217,000 Plant management salaries 224,000 2,353,000Gross profit 2,710,000Selling expenses Packaging 97,750 Shipping 132,000 Sales salary (annual) 277,000 506,750General and administrative expenses Advertising expense 135,000 Salaries 241,000 Entertainment expense 103,500 479,500Income from operations $1,723,750

1. Prepare a flexible budget performance report for 2019. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)

Phoenix Companys 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019
Sales				$	4,250,000
Cost of goods sold
Direct materials	$	935,000
Direct labor		340,000
Machinery repairs (variable cost)		68,000
DepreciationPlant equipment (straight-line)		315,000
Utilities ($51,000 is variable)		211,000
Plant management salaries		215,000			2,084,000
Gross profit					2,166,000
Selling expenses
Packaging		85,000
Shipping		119,000
Sales salary (fixed annual amount)		260,000			464,000
General and administrative expenses
Advertising expense		127,000
Salaries		241,000
Entertainment expense		100,000			468,000
Income from operations				$	1,234,000

Phoenix Companys actual income statement for 2019 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019
Sales (20,000 units)				$	5,063,000
Cost of goods sold
Direct materials	$	1,117,000
Direct labor		408,000
Machinery repairs (variable cost)		72,000
DepreciationPlant equipment (straight-line)		315,000
Utilities (fixed cost is $158,000)		217,000
Plant management salaries		224,000			2,353,000
Gross profit					2,710,000
Selling expenses
Packaging		97,750
Shipping		132,000
Sales salary (annual)		277,000			506,750
General and administrative expenses
Advertising expense		135,000
Salaries		241,000
Entertainment expense		103,500			479,500
Income from operations				$	1,723,750

Required: 1. Prepare a flexible budget performance report for 2019. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)