Business, 14.07.2020 21:01, galaxychild101
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 $ 3,150,000
Cost of goods sold
Direct materials $975,000
Direct labor 240,000
Machinery repairs (variable cost) 60,000
Depreciation-plant equipment
(straight-line) 315,000
Utilities ($60,000 is variable) 180,000
Plant management salaries 190,000 1,960,000
Gross profit 1,190,000
Selling expenses
Packaging 75,000
Shipping 105,000
Sales salary (fixed annual amount) 235,000 415,000
General and administrative expenses
Advertising expense 100,000
Salaries 230,000
Entertainment expense 80,000 410,000
Income from operations $365,000
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.
3. The company's business conditions are improving. One possible result is a sales volume of approximately 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2015 budgeted amount of $365,000 if this level is reached without increasing capacity?
Answers: 3
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