Required information Problem 21-1A Preparing and analyzing a flexible budget LO P1, A1 [The following information applies to the questions displayed below.) Phoenix Company's 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. $3,000,000 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 ($45,000 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 $ 945,00 225,000 50, ee 315,000 195,000 180,000 1,920,000 1,880,000 75,000 105,000 235,000 415,000 150,000 230.000 80,000 460,000 205,000 $ Problem 21-1A Part 182 Required: 182. Prepare flexible budgets for the company at sales volumes of 14,000 and 16,000 units and classify all items listed in the fixed budget as variable or fixed. PHOENIX COMPANY PHOENIX COMPANY Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Variable Total Fixed Amount per Cost Unit Flexible Budget for: Units Unit Sales of Sales of 14.000 16,000 Sales 200.00 2,800,000 3,200,000 Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping Entertainment expense Total variable costs OOOOOOO 63.00 15.00 4.00 3.00 5.00 7.00 5.33 102.33 382,000 X 210,000 56,000 42,000 70,000 98,000 74,667 932,667 1,008,000 240,000 64,000 48,000 80,000 112,000 85,333 1.637,333 Fixed costs Depreciation--Plant equipment (straight-line) Utilities Plant management salaries Sales salary OOO 150,000 180,000 235,000 315,000 150,000 180,000 235,000 315,000 150,000 180,000 235,000 315,000 150,000 180,000 235,000 $ 880,000 $ 880,000 $ 880,000 Problem 21-1A Part 4 4. An unfavorable change in business is remotely possible; in this case, production and sales volume for the year could fall to 12.000 units. How much income (or loss) from operations would occur if sales volume falls to this level? (Enter any loss with minus sign.) Answer is not complete. PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (in units) 15.000 12.000 Contribution margin (per s 103.00 103.00 unit Contribution margin $ 1,465,000 Fixed costs 1,340,000 1,340,000 Operating income (loss) $ 125,000 Problem 21-1A Part 3 3. The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the budgeted amount of $205,000 if this level is reached without increasing capacity? Answer is complete but not entirely correct. PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 15000 18.000 S 97 67 97 67 sales in units) Contribution margin (per Contribution margin Fixed costs Operating icomo 51,465.000 1.260.000 $ 205.000 1260,000 S 490,000 293.000 Operating income increase