[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. $3,150,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cost of goods sold Direct materials $975,000 Direct labor 225,000 Machinery repairs (variable cost) 45,000 Depreciation-Plant equipment (straight-line) 330,000 Utilities ($30,000 is variable) 195,000 Plant management salaries 220,000 Gross profit Selling expenses Packaging 90,000 Shipping 105,000 Sales salary (fixed annual amount) 235,000 General and administrative expenses Advertising expense 150,000 Salaries 241,000 Entertainment expense 85,000 Income from operations 1,990,000 1,160,000 430,000 476,000 254,000 $ 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 Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Variable Amount Total Fixed Cost $ 210.00 Flexible Budget for: Units Sales Unit Sales of of 14,000 16,000 $ 2,940,000 $ 3,360,000 per Unit Sales Variable costs 65.00 Direct materials Direct labor 14.00 Machinery repairs 3.00 910,000 196,000 42,000 42,000 84,000 1,040,000 224,000 48,000 48,000 96,000 112,000 Utilities 3.00 6.00 Packaging Shipping 7.00 98,000 98.00 1,372,000 1,568,000 1,568,000 1,792,000 $ 112.00 Total variable costs Contribution margin Fixed costs DepreciationPlant equipment (straight-line) Advertising expense Entertainment expense Plant management salaries Utilities Sales salary Salaries 300,000 135,000 210,000 300,000 135,000 210,000 300,000 135,000 210,000 $ 645,000 $ 645,000 $ 645,000 Total fixed costs Income from operations 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 $254,000 if this level is reached without increasing capacity? PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (in units) 15,000 18,000 Contribution margin (per unit) Contribution margin Fixed costs Operating income 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) 15,000 12,000 Contribution margin (per unit) Contribution margin Fixed costs Operating income (loss)