Problem 23-2A Preparation and analysis of a flexible budget performance report LO P1, P2, A1 Phoenix Companys 2015 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, 2015 Sales $ 3,375,000 Cost of goods sold Direct materials $ 1,050,000 Direct labor 225,000 Machinery repairs (variable cost) 45,000 Depreciationplant equipment (straight-line) 315,000 Utilities ($30,000 is variable) 190,000 Plant management salaries 215,000 2,040,000 Gross profit 1,335,000 Selling expenses Packaging 60,000 Shipping 90,000 Sales salary (fixed annual amount) 250,000 400,000 General and administrative expenses Advertising expense 128,000 Salaries 251,000 Entertainment expense 100,000 479,000 Income from operations $ 456,000

Phoenix Companys actual income statement for 2015 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2015 Sales (18,000 units) $ 4,113,000 Cost of goods sold Direct materials $ 1,275,000 Direct labor 278,000 Machinery repairs (variable cost) 46,000 Depreciationplant equipment (straight-line) 315,000 Utilities (fixed cost is $157,500) 192,750 Plant management salaries 225,000 2,331,750 Gross profit 1,781,250 Selling expenses Packaging 69,250 Shipping 100,500 Sales salary (annual) 269,000 438,750 General and administrative expenses Advertising expense 136,000 Salaries 251,000 Entertainment expense 103,500 490,500 Income from operations $ 852,000 Required: 1. Prepare a flexible budget performance report for 2015.

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