Phoenix Company's 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units. $4,250,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cost of goods sold Direct materials $1,190,000 Direct labor 170,000 Machinery repairs (variable cost) 68,000 Depreciation-plant equipment (straight-line) 300,000 Utilities ($51,000 is variable) 201,000 Plant management salaries 215,00 Gross profit Selling expenses Packaging 85,000 Shipping 119,000 Sales salary (fixed annual amount) 250,000 General and administrative expenses Advertising expense 129,000 Salaries 241,000 Entertainment expense 100,000 Income from operations 2,144,000 2,106,000 454,000 470,000 $1,182,000 Phoenix Company's actual income statement for 2019 follows. $5,078,000 PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019 Sales (20,000 units) Cost of goods sold Direct materials $1,417,000 Direct labor 208,000 Machinery repairs (variable cost) 72,000 Depreciation-Plant equipment (straight-line) 300,000 Utilities (fixed cost is $147,500) 206,750 Plant management salaries 225,000 Gross profit Selling expenses Packaging 97,500 Shipping 132,500 Sales salary (annual) 268,000 General and administrative expenses Advertising expense 136,000 Salaries 241,000 Entertainment expense 103,500 Income from operations 2,428,750 2,649,250 498,000 480,500 $1,670, 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.) PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2019 Flexible Budget Actual Results Variances | $ 5,078,000 Fav. / Unfav. Sales Favor Favorable Variable costs Direct materials Direct labor Machinery repairs 1,417,000 208,000 72,000 59,250 97,500 Unfavorable Unfavorable Favorable Favorable Favorable Favorable Utilities Packaging Shipping 132,500 0 1,986,250 Unfavorable Total variable costs Contribution margin 0 1,986,250 Unfavorable Total variable costs Contribution margin Fixed costs DepreciationPlant equipment (straight-line) 300,000 Utilities Plant management salaries 225,000 Sales salary Advertising expense 300,000 | 150,000 215,000 250,000 129,000 241,000 100,000| 268,000 136,000 241,000 103,500 No variance Favorable Unfavorable Unfavorable Unfavorable No variance Unfavorable Salaries Entertainment expense Total fixed costs 1,385,000 1,273,500 Unfavorable Favorable Income from operations
