Problem 23-4A Preparation and analysis of a flexible budget performance report L

Question

Problem 23-4A Preparation and analysis of a flexible budget performance report LO P1, P2, A1

Phoenix Company’s 2013 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units.

  

  

Prepare a flexible budget performance report for 2013. (Do not round intermediate calculations.)

Phoenix Company’s 2013 master budget included the following fixed budget report. It is based on an expected production and sales volume of 18,000 units.

Explanation / Answer

Answer:

PHOENIX COMPANY Flexible budget performance Report For Year Ended December 31, 2013 Fixed Budget Flexible Budget Actual Result Calculation Variances Fav./Unfav. Sales Volume 18000 21000 21000 Sales 45,00,000 52,50,000 53,13,000 63,000 Favorable Variable expenses:    {Fixed budget figures*(21000/18000)}         Direct materials 9,90,000 11,55,000 11,72,000 17,000 Unfavorable      Direct labor 2,25,000 2,62,500 2,70,500 8,000 Unfavorable      Machinery repairs (variable cost) 75,000 87,500 78,500 9,000 Favorable      Utilities ($50,000 is variable) 50,000 58,333 54,833 ($204833-$150000) 3,500 Favorable      Packaging 80,000 93,333 90,833 2,500 Favorable      Shipping 1,15,000 1,34,167 1,26,667 7,500 Favorable Total Variable expenses 15,35,000 17,90,833 17,93,333 2,500 Unfavorable Fixed expenses: Fixed      Depreciation—plant equipment 3,15,000 3,15,000 3,15,000 0      Utilities ($200,000-$50,000) 1,50,000 1,50,000 1,50,000 0      Plant management salaries 2,15,000 2,15,000 2,25,000 10,000 Unfavorable      Sales salary (fixed annual amount) 2,50,000 2,50,000 2,67,000 17,000 Unfavorable      Advertising expense 1,31,000 1,31,000 1,38,000 7,000 Unfavorable      Salaries 2,51,000 2,51,000 2,51,000 0 Unfavorable      Entertainment expense 1,10,000 1,10,000 1,13,500 3,500 Unfavorable Total Fixed Expenses 14,22,000 14,22,000 14,59,500 37,500 Unfavorable Income from operations 15,43,000 20,37,167 20,60,167 23,000 Unfavorable

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