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Aleks04 [339]
3 years ago
7

Problem 08-1A Preparing and analyzing a flexible budget LO P1, A1 [The following information applies to the questions displayed

below.] Phoenix Company’s 2019 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, 2019 Sales $ 3,150,000 Cost of goods sold Direct materials $ 945,000 Direct labor 225,000 Machinery repairs (variable cost) 45,000 Depreciation—Plant equipment (straight-line) 315,000 Utilities ($60,000 is variable) 180,000 Plant management salaries 200,000 1,910,000 Gross profit 1,240,000 Selling expenses Packaging 90,000 Shipping 105,000 Sales salary (fixed annual amount) 235,000 430,000 General and administrative expenses Advertising expense 150,000 Salaries 230,000 Entertainment expense 80,000 460,000 Income from operations $ 350,000 Problem 08-1A Part 1&2 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.

Business
1 answer:
cricket20 [7]3 years ago
4 0

Answer:

The answer is in the explanation

Explanation:

                                          Phoenix Company

                                          Fixed Budget Report  

                          For the 'fear Ended 31st December 2015  

                                                               Flexible Budget                    Flexible Budget for

                                             Variable Amount      Total Fixed       Unit Sales   Unit Sales

                                              per unit                     cost               of 14,000     of 16,000

Sales at 210 $ per unit (A)             210                                          2940000  3360000

                      Variable cost

Direct Material                             $ 62.00                                 $868,000.00  $ 992,000.00

Direct Labor                                  $ 14.00                                  $196,0000.00 $ 224,000.00

Machinery repairs                        $  3.00                                   $  42,000.00   $ 48,000.00

Utilities                                          $   2.00                                  $  28,000.00  $ 32,000.00

Packaging                                    $    6.00                                 $ 84,000.00    $ 96,000.00

Shipping                                       $    6.00                                 $ 84,000.00   $ 96,000.00

Total Variable Expenses (B)        $ 93.00                                 $1,302,000.00     $1,488,000.00

      Contribution margin (C=A-B)  $ 117.00                            $ 1,638,000.00 $ 1,872,000.00

      Fixed cost

Depreciation                                                    $ 315,000.00     $315,000.00   $ 315,000.00

Plant Management Salaries                           $ 210,000.00      $210,000.00  $ 210,000..

Utilities                                                             $ 180,000.00      $ 180,000.00 $ 180,000.00

Sales Salary                                                     $ 235,000.00      $ 235,000.00 $ 235,000.00

Advertising Expenses                                     $ 100,000.00      $ 100,000.00 $ 100,000.00  

Salaries                                                            $ 241,000.00      $ 241,000.00 $ 241,000.00

Entertainment Expenses                                $ 85,000.00       $ 85,000.00   $ 85,000.00

Total Fixed Expenses (D)                              $1,366,000.00   $1,366,000.00 $ I,366,000.00

                                                                        Net Profit (C-D)   $ 272,000.00 $ 506,000.00  

Variable Cost Per unit= Variable Cost / 150000  

                                Increase in Operating Income if Sales rise to 18000

                                                            Phoenix Company  

                                  Forecast contribution Margin Income Statement

                                          For the year Ended 31st December 2015  

Sales in Units                                                    15,000                  18,000

Contribution Margin Per Unit                    $           117            $          117

Contribution Margin                                   $ 1,755,000         $2,106,000

Fixed Costs                                                 $ 1,366,000         $ 1,366,000

Expected increase in Operating Income  $ 389,000           $ 740,000  

$ 351,000

                               Income (loss) from operation sale is reduced to 12000

                                                            Phoenix company  

                                  Forecast contribution Margin Income Statement

                                          For the year Ended 31st December 2015  

Sales in Units                                                    15,000                  12,000

Contribution Margin Per Unit                    $           117            $          117

Contribution Margin                                   $ 1,755,000         $1,404,000

Fixed Costs                                                 $ 1,366,000         $ 1,366,000

Operating Income                                     $ 389,000           $   38,000  

check the attached image for the correct arrangement of the tables and solution

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