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 15,000 units PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales $ 3,000,000 Cost of goods sold Direct materials Direct labor $975,0e0 225,000 60,000 300,000 195,000 200,000 1,955,000 Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($45,000 is variable) Plant management salaries Gross profit Selling expenses Packaging 1,045,000 75,000 105,000 250,000 Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries 430,000 125,000 241,000 90,000 Entertainment expense 456,000 $ 159,000 Income from operations Phoenix Company's actual income statement for 2017 follows PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (18,000 units) Cost of goods sold Direct materials 3,648,000 $1,185,000 278,000 63,000 300,00 200,500 210,000 2,236,500 Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities (fixed cost is $147,500) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (annual) General and administrative expenses Advertising expense Salaries 1,411,500 87,500 118,500 268,000 474,000 132,000 241,000 93,500 Entertainment expense 466,500 $ 471,000 Income from operations 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. I Unfav ales Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping Total variable costs Contribution margin Fixed costs Depreciation-Plant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense Salaries Entertainment expense Total fixed costs Income from operations
