[The following information applies to the questions displayed below.] Phoenix Co
ID: 2461509 • Letter: #
Question
[The following information applies to the questions displayed below.] Phoenix Company’s 2015 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, 2015 Sales $ 3,300,000 Cost of goods sold Direct materials $ 930,000 Direct labor 225,000 Machinery repairs (variable cost) 45,000 Depreciation—plant equipment (straight-line) 330,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 200,000 1,925,000 Gross profit 1,375,000 Selling expenses Packaging 75,000 Shipping 105,000 Sales salary (fixed annual amount) 235,000 415,000 General and administrative expenses Advertising expense 150,000 Salaries 230,000 Entertainment expense 75,000 455,000 Income from operations $ 505,000
2.value: 4.28 pointsRequired information 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. rev: 03_18_2016_QC_CS-46127 ReferenceseBook & Resources Expanded tableDifficulty: 3 HardLearning Objective: 21-P1 Prepare a flexible budget and interpret a flexible budget performance report. Check my work
3.value: 4.28 pointsRequired information 3. The company’s business conditions are improving. One possible result is a sales volume of approximately 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 2015 budgeted amount of $505,000 if this level is reached without increasing capacity? ReferenceseBook & Resources Expanded tableDifficulty: 3 HardLearning Objective: 21-P1 Prepare a flexible budget and interpret a flexible budget performance report. Check my work
4.value: 4.28 pointsRequired information 4. An unfavorable change in business is remotely possible; in this case, production and sales volume for 2015 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.) ReferenceseBook & Resources Expanded tableDifficulty: 3 HardLearning Objective: 21-P1 Prepare a flexible budget and interpret a flexible budget performance report. Check my work
Explanation / Answer
Solution-
Variable Cost Per Unit Unit Levels of Activity 15,000 14,000 16,000 Sales 220 3,300,000 3,080,000 3,520,000 Cost of goods sold-Variable Direct Materials 62 930,000 868,000 992,000 Direct Labor 15 225,000 210,000 240,000 Factory Overhead Utilities 3 45,000 42,000 48,000 Machinery Repair 3 45,000 42,000 48,000 Selling expense Packaging 5 75,000 70,000 80,000 Shipping 7 105,000 98,000 112,000 Total Variable Costs 95 1,425,000 1,330,000 1,520,000 Fixed Factory Overhead Plant management salary 200,000 200,000 200,000 Depreciation 330,000 330,000 330,000 Utilities 150,000 150,000 150,000 Fixed Selling Exp. Sales Salary 235,000 235,000 235,000 Fixed General and administrative expenses Advertising expense 150,000 150,000 150,000 Salaries 230,000 230,000 230,000 Entertainment expense 75,000 75,000 75,000 Total Fixed Costs 1,370,000 1,370,000 1,370,000 Total Costs 2,795,000 2,700,000 2,890,000 Profit 505,000 380,000 630,000Related Questions
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