Problem 23-2A Preparation and analysis of a flexible budget performance report LO P1, P2, A1 Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units. $ 4,050,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials $1,080,000 Direct labor 180,000 Machinery repairs (variable cost) 72,000 Depreciation-Plant equipment (straight-line) 330,000 Utilities ($54,000 is variable) 204,000 Plant management salaries 215,000 Gross profit Selling expenses Packaging 90,000 Shipping 126,000 Sales salary (fixed annual amount) 260,000 General and administrative expenses Advertising expense 128,000 Salaries 261,000 Entertainment expense 90,000 Income from operations 2,081,000 1,969,000 476,000 479,000 $1,014,000 Phoenix Company's actual income statement for 2017 follows. $ 4,803,000 PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (21,000 units) Cost of goods sold Direct materials $1,275,000 Direct labor 218,000 Machinery repairs (variable cost) 76,000 Depreciation-Plant equipment (straight-line) 330,000 Utilities (fixed cost is $147,500) 210,000 Plant management salaries 225,000 Gross profit Selling expenses Packaging 102,750 Shipping 139,500 Sales salary (annual) 279,000 General and administrative expenses Advertising expense 137,000 Salaries 261,000 Entertainment expense 94,000 Income from operations 2,334,000 2,469,000 521,250 492,000 $ 1,455, 750 Required: 1. Prepare a flexible budget performance report for 2017. PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2017 Flexible Budget Actual Results Variances Fav. / Unfav. Variable costs Fixed costs