Phoenix Companys 2019 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, 2019
Sales				$	3,150,000
Cost of goods sold
Direct materials	$	945,000
Direct labor		225,000
Machinery repairs (variable cost)		60,000
DepreciationPlant equipment (straight-line)		315,000
Utilities ($60,000 is variable)		210,000
Plant management salaries		210,000			1,965,000
Gross profit					1,185,000
Selling expenses
Packaging		75,000
Shipping		90,000
Sales salary (fixed annual amount)		235,000			400,000
General and administrative expenses
Advertising expense		150,000
Salaries		230,000
Entertainment expense		85,000			465,000
Income from operations				$	320,000

Required: 1&2. 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.

. The companys 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 $320,000 if this level is reached without increasing capacity?

7 Required information Cost 16,000 Unit 210.00 14,000 $ 2,940,000 Part 1 of 3 Sales $ > 3,360,000 C Variable costs Direct materials 63.00 882,000 6 points Direct labor 15.00 210,000 4.00 Machinery repairs Utilities Packaging Shipping OOOOOO 56,000 5.00 70,000 0 Total variable costs Contribution margin 87.00 113.00 1,218,000 1,582,000 $ Fixed costs DepreciationPlant equipment (straight-line) Utilities 150,000 150,000 Plant management salaries Sales salary OOOOOOO 150,000 210,000 235,000 150,000 230,000 235,000 Advertising expense Salaries 150,000 230,000 235,000 150,000 230,000 Entertainment expense $ 975,000 Total fixed costs Income from operations olol $ 765,000 $ 765,000 $ 593,000 X PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (in units) 15,000 18,000 Contribution margin (per unit) $ 113.00 $ 113.00 Contribution margin Fixed costs Operating income $ 320,000 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 Fixed costs Operating income (loss)