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0 Required information The following information applies to the questions displayed below Phoenix Company's 2017 master budget included the following fixed budget report. it is based on an expected product and sales volume of 15,000 units PHOENIX COMPANY Pixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold $3,150,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line)315,000 Utilities ($45,000 is variable) Plant management salaries $975,000 225,000 45, 000 180,000 200,000 1,940.000 1,210,000 Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) 90,000 90,000 235,000415,000 General and administrative expenses Advertising expense Salaries 125,000 230,000 75,000 430,000 Entertainment expense $365,000 Income from operations 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 fixe budget as variable or fixed. PHÕENIX COMPANY Fixed Budget Report Prev 3 of 4 ??? Next >.Explanation / Answer
PHOENIX COMPANY
FIXED BUDGET REPORT FOR YEAR ENDED DECEMBER 31, 2017
FLEXIBLE BUDGET
FLEXIBLE BUDGET FOR :
Variable amount per unit
Total fixed cost
Sales of 14000 units
Sales of 16000 units
Sales
210
2940000
3360000
VARIABLE COSTS
Direct material
65
910000
1040000
Direct labour
15
210000
240000
Machinery repairs
3
42000
48000
utilities
3
42000
48000
packinng
6
84000
96000
shipping
6
84000
96000
Total variable cost
98
1372000
1568000
Contribution margin
112
1568000
1792000
FIXED COST :
Depreciation
315000
315000
315000
Utilities
135000
135000
135000
Plant management salaries
200000
200000
200000
Sales salary
235000
235000
235000
Advertising expenses
125000
125000
125000
Salaries
230000
230000
230000
Entertainment expenses
75000
75000
75000
Total fixed cost
1315000
1315000
1315000
Income from operations
253000
477000
Phoenix company
Forecasted contribution margin income statement
Sales (in units)
15000
18000
Contribution margin (per unit)
112
112
Contribution margin
1680000
2016000
Fixed cost
1315000
1315000
Operating income
365000
701000
The operating income increases by $336000 over and above $365000 for the budgeted sales of 18000 units
Phoenix company
Forecasted contribution margin income statement
Sales (in units)
15000
12000
Contribution margin (per unit)
112
112
Contribution margin
1680000
1344000
Fixed cost
1315000
1315000
Operating income
365000
29000
PHOENIX COMPANY
FIXED BUDGET REPORT FOR YEAR ENDED DECEMBER 31, 2017
FLEXIBLE BUDGET
FLEXIBLE BUDGET FOR :
Variable amount per unit
Total fixed cost
Sales of 14000 units
Sales of 16000 units
Sales
210
2940000
3360000
VARIABLE COSTS
Direct material
65
910000
1040000
Direct labour
15
210000
240000
Machinery repairs
3
42000
48000
utilities
3
42000
48000
packinng
6
84000
96000
shipping
6
84000
96000
Total variable cost
98
1372000
1568000
Contribution margin
112
1568000
1792000
FIXED COST :
Depreciation
315000
315000
315000
Utilities
135000
135000
135000
Plant management salaries
200000
200000
200000
Sales salary
235000
235000
235000
Advertising expenses
125000
125000
125000
Salaries
230000
230000
230000
Entertainment expenses
75000
75000
75000
Total fixed cost
1315000
1315000
1315000
Income from operations
253000
477000
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