Required Informetion The following Information appliles to the questions display
ID: 2535466 • Letter: R
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Required Informetion The following Information appliles to the questions displayed below Phoenix Company's 2017 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, 2017 sales cost of goods sold 3,e0e,ee0 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) utilities (s30,0ee is variable) Plant management salaries 915,8ee 21e,8ee 6e,eee 315,0ee 188,8ee 2ee,eee 1,88e,e00 Gross profit Selling expenses 1,12e,eee Packaging shipping ales salary (fixed annual amount) 75,e0 9e,eee 235,800 400,808 General and administrative expenses Advertising expense Salaries Entertainnent expense 1ee,eee 241,eee 85,800 426,80e $ 294,ee8 Income from operations 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. PHOENIX COMPANY Fixed Budget Report For Year Ended December 31. 2017 Flexible Budget Total Fixed Cost Flexible Budget for: Units Sales Unit Sales 16,000 Variable Amount Unit of 14 Variable costs Fixed costsExplanation / Answer
Solution A:
Phoenix Company
Flexible Budgets
For The Year Ended December 31, 2017
Flexible Budget
Flexible Budget for:
Variable Amount per unit
Total Fixed cost
Unit Sales of 14,000
Unit Sales of 16,000
Sales
$ 200.00
$ 2,800,000
$ 3,200,000
Variable cost:
Direct Material
61.00
854,000
976,000
Direct labor
14.00
196,000
224,000
Machinery repairs
4.00
56,000
64,000
Utilities
2.00
28,000
32,000
Packaging
5.00
70,000
80,000
Shipping
6.00
84,000
96,000
Total Variable cost
92.00
1,288,000
1,472,000
Contribution Margin
$ 108.00
$ 1,512,000
$ 1,728,000
Fixed cost:
Depreciation-Plant Equipment
315,000
315,000
315,000
Utilities
150,000
150,000
150,000
Plant management salaries
200,000
200,000
200,000
Sales salary
235,000
235,000
235,000
Advertising
100,000
100,000
100,000
Salaries
241,000
241,000
241,000
Entertainment expense
85,000
85,000
85,000
Total fixed cost
$ 1,326,000
$ 1,326,000
$ 1,326,000
Income from operations
$ 186,000
$ 402,000
Working Notes:
Variable sales
(a) Sales: $3,000,000 / 15,000 units = $200.00
Variable costs
(b)Direct materials: $915,000 / 15,000 units = $61.00
(c )Direct labor: $210,000 / 15,000 units = $14.00
(d) Machinery repairs: $60,000 / 15,000 units = $4.00
(e )Utilities: $30,000 / 15,000 units = $2.00
(f) Packaging: $75,000 / 15,000 units = $5.00
(g) Shipping: $90,000 / 15,000 units = $6.00
Fixed costs
(h)Utilities ($180,000 – $30,000 is variable) = $150,000
Phoenix Company
Flexible Budgets
For The Year Ended December 31, 2017
Flexible Budget
Flexible Budget for:
Variable Amount per unit
Total Fixed cost
Unit Sales of 14,000
Unit Sales of 16,000
Sales
$ 200.00
$ 2,800,000
$ 3,200,000
Variable cost:
Direct Material
61.00
854,000
976,000
Direct labor
14.00
196,000
224,000
Machinery repairs
4.00
56,000
64,000
Utilities
2.00
28,000
32,000
Packaging
5.00
70,000
80,000
Shipping
6.00
84,000
96,000
Total Variable cost
92.00
1,288,000
1,472,000
Contribution Margin
$ 108.00
$ 1,512,000
$ 1,728,000
Fixed cost:
Depreciation-Plant Equipment
315,000
315,000
315,000
Utilities
150,000
150,000
150,000
Plant management salaries
200,000
200,000
200,000
Sales salary
235,000
235,000
235,000
Advertising
100,000
100,000
100,000
Salaries
241,000
241,000
241,000
Entertainment expense
85,000
85,000
85,000
Total fixed cost
$ 1,326,000
$ 1,326,000
$ 1,326,000
Income from operations
$ 186,000
$ 402,000
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