Problem 23-2A Preparation and analysis of a flexible budget performance report LO P1, P2, A1

Phoenix Companys 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	$	750,000
Direct labor		225,000
Machinery repairs (variable cost)		60,000
DepreciationPlant equipment (straight-line)		300,000
Utilities ($45,000 is variable)		205,000
Plant management salaries		215,000			1,755,000
Gross profit					1,245,000
Selling expenses
Packaging		75,000
Shipping		105,000
Sales salary (fixed annual amount)		260,000			440,000
General and administrative expenses
Advertising expense		134,000
Salaries		241,000
Entertainment expense		100,000			475,000
Income from operations				$	330,000

Phoenix Companys actual income statement for 2017 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017
Sales (18,000 units)				$	3,678,000
Cost of goods sold
Direct materials	$	916,000
Direct labor		279,000
Machinery repairs (variable cost)		64,000
DepreciationPlant equipment (straight-line)		300,000
Utilities (fixed cost is $157,000)		210,500
Plant management salaries		226,000			1,995,500
Gross profit					1,682,500
Selling expenses
Packaging		87,250
Shipping		118,500
Sales salary (annual)		278,000			483,750
General and administrative expenses
Advertising expense		141,000
Salaries		241,000
Entertainment expense		103,000			485,000
Income from operations				$	713,750

Required: 1. Prepare a flexible budget performance report for 2017.