Required information

[The following information applies to the questions displayed below.] 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	$	975,000
Direct labor		225,000
Machinery repairs (variable cost)		60,000
DepreciationPlant equipment (straight-line)		300,000
Utilities ($45,000 is variable)		195,000
Plant management salaries		200,000			1,955,000
Gross profit					1,045,000
Selling expenses
Packaging		75,000
Shipping		105,000
Sales salary (fixed annual amount)		250,000			430,000
General and administrative expenses
Advertising expense		125,000
Salaries		241,000
Entertainment expense		90,000			456,000
Income from operations				$	159,000

Required: 1.a/b 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.

1.c The companys 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 2017 budgeted amount of $159,000 if this level is reached without increasing capacity?

1.dAn unfavorable change in business is remotely possible; in this case, production and sales volume for 2017 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 Fixed Budget Report For Year Ended December 31, 2017 Flexible Budget Flexible Budget for: Variable Amount Total Fixed Units Sales Unit Sales of per Unit Cost of 14.000 15.000 s 200.00 $2,800,000 $ 3,200,000 Advertising expense Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging 1 3 62.00 15.00 .00 2.00 5.00 6.00 868,000 210,000 42.000 28.000 70,000 84.000 002,000 240,000 48,000 32.000 80.000 98.000 Shipping 93.00 107.00 1,302,000 1.498,000 1,488,000 1.712,000 ($ Total variable costs Contribution margin Fixed costs Depreciation-Plant equipment (straight-line) | Advertising expense 315,000 125.000 Entertainment expense 85.000 Plant management salaries 315.000 125,000 85.000 200.000 150.000 235,000 230,000 315,000 125.000 85.000 200.000 150.000 235,000 230,000 Utilities 200.000 150.000 235,000 230.000 Sales salary Salaries | $ 1.340.000 Total foced costs Income from operations $1,340,000 $ 158,000 $ $ 1.340,000 372.000 PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 15.000 Sales (in units) Contribution margin (per unit) Contribution margin Fixed costs Operating income 12.000 PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (in units) Contribution margin (per unit) Contribution margin Fixed costs Operating income (loss)