Required 1&2. Prepare flexible budgets for the company at sales volumes of 14,00

Question

Required 1&2. Prepare flexible budgets for the company at sales volumes of 14,000 and 16,000 units and classify all items lis budget as variable or fixed PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Flexible Budget Flexible Budget for: Variable Amount Total Fixed Units Sales Unit Sales of er Unit Cost 16,000 of 14,000 $2,800,000 3,200,000 200.00 Variable costs Direct materials Direct labor Machinery repairs Utilities Packaging Shipping 65.00 15.00 4.00 3.00 5.00 7.00 910,0001040,000 240,000 64,000 48,000 80,000 112,000 210,000 56,000 42,000 70,000 98,000 99.00 101.00 1,386,000 1584,000 1,414,0001,616,000 otal variable costs ontribution margin Fixed costs Depreciation-Plant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense Salaries Entertainment expense 300,000 150,000 200,000 250,000 125,000 241,000 90,000 300,000 150,000 200,000 250,000 125,000 241,000 90,000 300,000 150,000 200,000 250,000 125,000 241,000 90,000 otal fixed costs $ 1,356,000 $1,356,000$ 1,356,000

Explanation / Answer

Increase = 303000

Operating income (loss) at 12,000 units = (144000)

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Flexible Budget Flexible Budget for: Variable Amount per Unit Total Fixed Cost Units Sales of 14000 Units Sales of 16000 Sales 200 2800000 3200000 Variable costs Direct materials 65 910000 1040000 Direct labor 15 210000 240000 Machinery repairs 4 56000 64000 Utilities 3 42000 48000 Packaging 5 70000 80000 Shipping 7 98000 112000 Total variable costs 99 1386000 1584000 Contribution margin 101 1414000 1616000 Fixed costs Depreciation—Plant equipment (straight-line) 300000 300000 300000 Advertising expense 125000 125000 125000 Entertainment expense 90000 90000 90000 Plant management Salaries 200000 200000 200000 Utilities 150000 150000 150000 sales salary 250000 250000 250000 Salaries 241000 241000 241000 Total fixed costs 1356000 1356000 1356000 Income from operations 58000 260000

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