Phoenix Company's 2013 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units.
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PHOENIX COMPANY
Fixed Budget Report
For Year Ended December 31, 2013
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Sales
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$ 3,300,000
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Cost of goods sold
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Direct materials
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$ 915,000
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Direct labor
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240,000
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Machinery repairs (variable cost)
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45,000
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Depreciation-plant equipment
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315,000
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Utilities ($60,000 is variable)
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180,000
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Plant management salaries
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200,000
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1,895,000
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Gross profit
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1,405,000
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Selling expenses
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Packaging
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75,000
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Shipping
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105,000
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Sales salary (fixed annual amount)
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235,000
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415,000
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General and administrative expenses
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Advertising expense
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125,000
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Salaries
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230,000
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Entertainment expense
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85,000
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440,000
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Income from operations
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$ 550,000
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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.
eBook & Resources
eBook: Preparation of Flexible Budgets