Tohono Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units PROBLEM SET B TOHONO COMPANY Fixed Budget Report For Year Ended December 31, 2017 Problem 23-1B Preparation and analysis of a flexible budget P1 A1 Sales Cost of goods sold $3,000,000 Direct materials $1,200,000 260,000 57,000 250,000 . 200,000 Direct labor Machinery repairs (variable cost).. Depreciation-Machinery (straight line Utilities (25% is variable cost Plant manager salaries 140,0002,107,000 893,000 Gross prof Selling expenses Packaging Shipping Sales salary (fixed annual amount). 116,000 160,000356,000 General and administrative expenses Advertising Salaries. . Entertainment expense. 81,000 241,000 90,000412.000 $ 125,000 Income from operations Required 1. Classify all items listed in the fixed budget as variable or fixed dso determine their amounts per unit or their amounts for the year, as appropriate. 2. Prepare flexible budgets (see Exhibi 23,3) for the company at sales volumes of 18,000 and 24,000 units. check 3. The company's business conditions are improving. One possible result is a sales volume of at 24,000 units, $372.400 28.000 units. The company president is confident that this volume is within the relevant range of exist- ing capacity. How much would operating income increase over the 2017 budgeted amount of $125,000 if this level is reached without increasing capacity? 4. An unfavorable change in business is remotely possible: in this case, production and sales volume for 4) Potential 2017 could fall to 14,000 units. How much income (or loss) from operations would occur if sales vol- operating loss, $/246,100) ume falls to this level