C ezto.mheducation.com/hm.tpx [The following information applies to the question

Question

C ezto.mheducation.com/hm.tpx [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 $3150,000 Sales Cost of goods sold $945,000 Direct materials Direct labor Machinery repairs (variable cost) Depreciation-plant equipment (straight- 225,000 45,000 315,000 210,000 210,000 1950,000 line) Utilities ($45,000 is variable) Plant management salaries Gross proft Selling expenses 1,200,000 Packaging Shipping 75,000 90,000 235,000 Sales salary (fixed annual amount) 400,000 General and administrative expenses Advertising expense Salaries Entertainment expense 125,000 241,000 80,000 446,000 Income from operations $ 354,000 value 6.42 points Required

Explanation / Answer

Answer 1 & 2. PHOENIX COMPANY Fixed Budget Report For the Year Ended Dec 31, 2015 Flexible Budget Flexible Budget For Variable Amt per Unit Total Fixed Cost Unit Sales of 14,000 Unit Sales of 16,000 Variable Costs Direct Material                        63              882,000          1,008,000 Direct Labor                        15              210,000              240,000 Machinery Repairs                           3                42,000                48,000 Utilities                           3                42,000                48,000 Packaging                           5                70,000                80,000 Shipping                           6                84,000                96,000 Total Variable Costs                        95          1,330,000          1,520,000 Fixed Costs Depreciation - Plant Equipment              315,000              315,000              315,000 Utilities              165,000              165,000              165,000 Plant Management Salaries              210,000              210,000              210,000 Sales Salaries              235,000              235,000              235,000 Advertising Expense              125,000              125,000              125,000 Salaries - Gem . & Admn. Expenses              241,000              241,000              241,000 Entertainment expenses                80,000                80,000                80,000 Total Fixed Costs          1,371,000          1,371,000          1,371,000 Answer 3. PHOENIX COMPANY Forecasted Contribution Margin Income Statement For the Year Ended Dec 31, 2015 Sales in Units          15,000.00          18,000.00 Contribution Margin per Unit                115.00                115.00 Contribution Margin per Unit    1,725,000.00    2,070,000.00 Fixed Costs    1,371,000.00    1,371,000.00 Expected Increase in operating Income        354,000.00        699,000.00        345,000.00 Answer 4. PHOENIX COMPANY Forecasted Contribution Margin Income Statement For the Year Ended Dec 31, 2015 Sales in Units          15,000.00          12,000.00 Contribution Margin per Unit                115.00                115.00 Contribution Margin per Unit    1,725,000.00    1,380,000.00 Fixed Costs    1,371,000.00    1,371,000.00 Operating Income (Loss)        354,000.00            9,000.00

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