[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, 2019Sales$3,150,000Cost of goods soldDirect materials$960,000Direct labor225,000Machinery repairs (variable cost)45,000DepreciationPlant equipment (straight-line)330,000Utilities ($60,000 is variable)195,000Plant management salaries200,0001,955,000Gross profit1,195,000Selling expensesPackaging90,000Shipping90,000Sales salary (fixed annual amount)235,000415,000General and administrative expensesAdvertising expense150,000Salaries241,000Entertainment expense90,000481,000Income from operations$299,000

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.