Required information [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. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales $3,150,000 Cost of goods sold Direct materials Direct labor $960,000 225,000 Utilities ($45,000 is variable) Selling expenses Machinery repairs (variable cast) Depreciation-Plant equipment (straight-line) Plant management salaries Gross profit Packaging 60,000 300,000 195,000 190,000 1,930,000 1,220,000 90,000 Shipping 90,000 Sales salary (fixed annual amount) 235,000 415,000 Advertising expense General and administrative expenses Salaries Entertainment expense Income from operations 125,000 230,000 90,000 445,000 $ 360,000 Required: 1&2. 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. Sales Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping Total variable costs PHOENIX COMPANY Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Variable Amount Total Fixed per Unit Cost Flexible Budget for: Units Sales Unit Sales of of 14,000 $ 2,940,000 16,000 $3,360,000 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 0.00 0 0 $ 0 S 0 $ 0 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 $360,000 if this level is reached without increasing capacity? Sales (in units) Contribution margin (per unit) Contribution margin Fixed costs Operating income PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 15,000 18,000 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.) PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (in units) Contribution margin (per unit) Contribution margin Fixed costs Operating income (loss) 15,000 12,000