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PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2019 Flexible Budget Actual Results Variances Fav. / Unfav. 5 4.725,000 $4,803,000 $ 78,000 Favorable Sales Variable costs Direct materials 1.470,000 1,486,000 16,000 Unfavorabi Direct labor 315.000 323,000 8,000 Unfavorabl e 63.000 54,000 Machinery repairs Utilities Packaging Shipping 42,000 84.000 41.250 81.250 5.000 Favorable 750 Favorable 2.750 Favorable 7.500 Favorable 126,000 118,500 2.100.000 2.104,000 4,000 Unfavorabl 74,000 Favorable 2,625,000 2,699,000 Total variable costs Contribution margin Fixed costs Depreciation-Plant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense 330.000 150.000 215,000 260,000 126,000 330,000 148,000 224,000 279,000 133,000 251,000 No variance 2.000 Favorable 9,000 Unfavorabi 19.000 Unfavorabi 7.000 Unfavorabi Salaries 251,000 No variance 3.500 Unfavorabl Entertainment expense 110.000 113,500 e $ 4.050.000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($36,000 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 $1.200.000 270.000 54.000 330.000 186,000 215.000 2.315.000 1,735.000 72.000 108.000 200.000 440.000 120.000 251.000 110.000 487.000 5 808.000 $ 4,803.000 Phoenix Company's actual income statement for 2019 follows. PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019 Sales (21,000 units) Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities (fixed cost is $ 148,000) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (annual) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations $1,486.000 323.000 54.000 330.000 189.250 224.000 2.606.250 2. 196.750 81.250 118.500 279.000 478.750 133.000 251.000 113.500 497.500 $ 1.220.500 ) With respect to variable overhead, calculate the following relating to their operating results for the year. a) Remember Phoenix Company applies overhead (variable and fixed) based on direct labor hours. Therefore, the total quantity of input (hours) for variable overhead will equal those of direct labor. Calculate an average variable overhead actual rate as variable overhead expenses divided by direct labor hours (actual). Show 2 decimals. Use this as your actual rate, AR, to calculate spending and efficiency variance below. Actual Variable OH Costs AH AR X Variable Overhead Variances Flexible Budget AH SR Standard Cost (VOH applied) SH SR Favorable/Unfavorable Variable OH spending variance Variable OH efficiency variance Total variable OH variance PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2019 Flexible Budget Actual Results Variances Fav. / Unfav. 5 4.725,000 $4,803,000 $ 78,000 Favorable Sales Variable costs Direct materials 1.470,000 1,486,000 16,000 Unfavorabi Direct labor 315.000 323,000 8,000 Unfavorabl e 63.000 54,000 Machinery repairs Utilities Packaging Shipping 42,000 84.000 41.250 81.250 5.000 Favorable 750 Favorable 2.750 Favorable 7.500 Favorable 126,000 118,500 2.100.000 2.104,000 4,000 Unfavorabl 74,000 Favorable 2,625,000 2,699,000 Total variable costs Contribution margin Fixed costs Depreciation-Plant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense 330.000 150.000 215,000 260,000 126,000 330,000 148,000 224,000 279,000 133,000 251,000 No variance 2.000 Favorable 9,000 Unfavorabi 19.000 Unfavorabi 7.000 Unfavorabi Salaries 251,000 No variance 3.500 Unfavorabl Entertainment expense 110.000 113,500 e $ 4.050.000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($36,000 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 $1.200.000 270.000 54.000 330.000 186,000 215.000 2.315.000 1,735.000 72.000 108.000 200.000 440.000 120.000 251.000 110.000 487.000 5 808.000 $ 4,803.000 Phoenix Company's actual income statement for 2019 follows. PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019 Sales (21,000 units) Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities (fixed cost is $ 148,000) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (annual) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations $1,486.000 323.000 54.000 330.000 189.250 224.000 2.606.250 2. 196.750 81.250 118.500 279.000 478.750 133.000 251.000 113.500 497.500 $ 1.220.500 ) With respect to variable overhead, calculate the following relating to their operating results for the year. a) Remember Phoenix Company applies overhead (variable and fixed) based on direct labor hours. Therefore, the total quantity of input (hours) for variable overhead will equal those of direct labor. Calculate an average variable overhead actual rate as variable overhead expenses divided by direct labor hours (actual). Show 2 decimals. Use this as your actual rate, AR, to calculate spending and efficiency variance below. Actual Variable OH Costs AH AR X Variable Overhead Variances Flexible Budget AH SR Standard Cost (VOH applied) SH SR Favorable/Unfavorable Variable OH spending variance Variable OH efficiency variance Total variable OH variance