The following information applies to the questions displayed below] Phoenix Comp

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 S 3,150,000 Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment (straight-line) $ 900,000 210,000 60,000 300,000 195,000 180,000 Utilities ($30,000 is variable) Plant management salaries 1845,000 Gross proft Selling expenses 1,305,000 Packaging Shipping Sales salary (fixed annual amount) 90,000 90,000 235,000 415,000 General and administrative expenses Advertising expense Salaries Entertainment expense 25,000 241,000 85,000 451,000 Income from operations $ 439,000

Explanation / Answer

PHENIX COMPANY Flexible Budget Flexible budget for Variable amount Total Fixed Unit sales Unit Sales per unit Cost for14000 for 16000 Sales(per unit=3150000/15000=210) $                         210 $   2,940,000 $ 3,360,000 Variable cost: Direct materials(per unit=900000/15000)=60 $                           60 $       840,000 $     960,000 Direct labor(per unit=210000/15000=14) $                           14 $       196,000 $     224,000 Machinery repair(per unit=60000/15000=4) $                              4 $         56,000 $        64,000 Utilities(per unit=30000/15000=2 $2 $         28,000 $        32,000 Packaging (per unit=90000/15000)=6 $6 $         84,000 $        96,000 Shipping(per unit=90000/15000)=6 $6 $         84,000 $        96,000 Total variable cost $                           92 $   1,288,000 $ 1,472,000 Contribution Margin(210-92)=118 $                         118 $   1,652,000 $ 1,888,000 Fixed costs: Depreciation-Plant &Equipment(St. Line) $300,000 $300,000 $300,000 Utilities(195000-30000) $165,000 $165,000 $165,000 Plant management salaries $180,000 $180,000 $180,000 Sales salaries $235,000 $235,000 $235,000 Advertisement expenses $125,000 $125,000 $125,000 Salaries $241,000 $241,000 $241,000 Entertainment expenses $85,000 $85,000 $85,000 Total fixed costs $1,331,000 $1,331,000 $1,331,000 Income from operations $       321,000 $     557,000 PHENIX COMPANY Forcasted contribution margin Income Statement For the year ended December 31, 2015 Sales (in units) 15000 18000 Contribution Margin(per unit) $118 $118 Contribution Margin $1,770,000 $2,124,000 Fixed costs $1,331,000 $1,331,000 Expected increase in operating income $439,000 $793,000 $354,000 PHENIX COMPANY Forcasted contribution margin Income Statement For the year ended December 31, 2015 Sales (in units) 15000 12000 Contribution Margin(per unit) $118 $118 Contribution Margin $1,770,000 $1,416,000 Fixed costs $1,331,000 $1,331,000 Oerating income(loss) $439,000 $85,000

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