Question

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. $ 3,150,000 unt PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2015 Sales Cost of goods sold Direct materials $ 945,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation-plant equipment (straight-line) 330,000 Utilities ($60,000 is variable) 180,000 Plant management salaries 190,000 Gross profit Selling expenses Packaging 75,000 Shipping 105,000 Sales salary fixed annual amount) 235.000 oard 1,930,000 1,220,000 415,000 indar General and administrative expenses Advertising expense Salaries Entertainment expense 125,000 230,000 85,000 440,000 Income from operations $ 365,000

Answer 1

Solution

PHOENIX COMPANY
Flexible Budget report
For year ended December 31, 2015
	Flexible budget		Flexible budget for
	variable Amount per Unit	Total Fixed cost		14000 units	16000 units
Sales	$ 210			$ 2,940,000	$ 3,360,000
Variable costs
Direct material	$ 63			$ 882,000	$ 1,008,000
Direct Labor	$ 15			$ 210,000	$ 240,000
Machinery repairs	$ 4			$ 56,000	$ 64,000
Utilities	$ 4			$ 56,000	$ 64,000
Packaging	$ 5			$ 70,000	$ 80,000
Shipping	$ 7			$ 98,000	$ 112,000
Total Variable Coists	$ 98			$ 1,372,000	$ 1,568,000
Contribution margin	$ 112			$ 1,568,000	$ 1,792,000
Fixed costs
Depreciation- Plant equipment		$ 330,000		$ 330,000	$ 330,000
Utilities		$ 120,000		$ 120,000	$ 120,000
Plant management salaries		$ 190,000		$ 190,000	$ 190,000
Sales salaries		$ 235,000		$ 235,000	$ 235,000
Advertising expenses		$ 125,000		$ 125,000	$ 125,000
Salaries		$ 230,000		$ 230,000	$ 230,000
Entertainment expenses		$ 85,000		$ 85,000	$ 85,000
Total Fixed costs		$ 1,315,000		$ 1,315,000	$ 1,315,000
Income from Operations				$ 253,000	$ 477,000

.

Requirement 3

PHOENIX COMPANY
Forcasted Contribution margin Income Statement
For the year ended December 31, 2015
Sales(in units)	15000	18000
Contribution margin per unit	$              112.00	$              112.00
Contribution margin	$ 16,80,000.00	$ 20,16,000.00
Fixed cost	$ 13,15,000.00	$ 13,15,000.00
Operating income	$    3,65,000.00	$     7,01,000.00	$ 336,000	Operating income increase

Requirement 4

PHOENIX COMPANY
Forcasted Contribution margin Income Statement
For the year ended December 31, 2015
Sales(in units)	15000	12000
Contribution margin per unit	$              112.00	$              112.00
Contribution margin	$ 16,80,000.00	$ 13,44,000.00
Fixed cost	$ 13,15,000.00	$ 13,15,000.00
Operating income	$    3,65,000.00	$        29,000.00