The following information applies to the questions displayed

[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’s 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units.

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, 2015 Flexible Budget Flexible Budget for: Variable Amount Total Fixed Units Sales of Unit Sales of per Unit Cost 14,000 16,000 Variable costs Fixed costs

Solution

Phoenix Company Fixed Budget Report For the Tear ended Dec.31,2015 Flexible Budget Flexible Budget for Variable amt./unit Total Fixed cost Unit sales of 14000 Unit sales of 15000 Sales-----------1 210 2940000 3150000 Less: Variable costs Direct materials 63 882000 945000 Direct Labor 14 196000 210000 Machinery repairs 3 42000 45000 Utilities(30000) 2 28000 30000      Packaging 5 70000 75000      Shipping 7 98000 105000 Total variable costs----2 94 1316000 1410000 Contribution Margin (1-2) 116 1624000 1740000 Fixed costs Depn.-P&E (straight-line) 330000 330000 330000 Fixed utilities 165000 165000 165000      Plant management salaries 180000 180000 180000      Sales salary 235000 235000 235000      Advertising expense 150000 150000 150000      Salaries 241000 241000 241000      Entertainment expense 80000 80000 80000 Total fixed costs----3 1381000 1381000 1381000 Income from operations(1-2-3) 243000 359000 Phoenix Company Forecasted Contribution Margin Income statement For the year ended Dec.31, 2015 Sales in units 15000 18000 Contribution Margin/Unit 116 116 Total contribution Margin 1740000 2088000 Less: Fixed costs 1381000 1381000 Operating Income 359000 707000 Increase in Opg. Income(707000-359000) (Increase) 348000 Phoenix Company Forecasted Contribution Margin Income statement For the year ended Dec.31, 2015 Sales in units 15000 12000 Contribution Margin/Unit 116 116 Total contribution Margin 1740000 1392000 Less: Fixed costs 1381000 1381000 Operating Income 359000 11000 Decrease in Opg. Income (11000-359000) (Decrease) -348000 Phoenix Company Fixed Budget Report For the Tear ended Dec.31,2015 Flexible Budget Flexible Budget for Variable amt./unit Total Fixed cost Unit sales of 14000 Unit sales of 16000 Sales-----------1 210 2940000 3360000 Less: Variable costs Direct materials 63 882000 1008000 Direct Labor 14 196000 224000 Machinery repairs 3 42000 48000 Utilities(30000) 2 28000 32000      Packaging 5 70000 80000      Shipping 7 98000 112000 Total variable costs----2 94 1316000 1504000 Contribution Margin (1-2) 116 1624000 1856000 Fixed costs Depn.-P&E (straight-line) 330000 330000 330000 Fixed utilities 165000 165000 165000      Plant management salaries 180000 180000 180000      Sales salary 235000 235000 235000      Advertising expense 150000 150000 150000      Salaries 241000 241000 241000      Entertainment expense 80000 80000 80000 Total fixed costs----3 1381000 1381000 1381000 Income from operations(1-2-3) 243000 475000