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Problem 23-4A Preparation and analysis of a flexible budget performance report LO P1, P2, A1

Phoenix Companys 2013 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2013

Sales				$	4,250,000
Cost of goods sold
Direct materials	$	990,000
Direct labor		225,000
Machinery repairs (variable cost)		75,000
Depreciationplant equipment		330,000
Utilities ($50,000 is variable)		200,000
Plant management salaries		230,000			2,050,000
Gross profit					2,200,000
Selling expenses
Packaging		85,000
Shipping		115,000
Sales salary (fixed annual amount)		260,000			460,000
General and administrative expenses
Advertising expense		130,000
Salaries		251,000
Entertainment expense		90,000			471,000
Income from operations				$	1,269,000

Phoenix Companys actual income statement for 2013 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2013

Sales (20,000 units)				$	5,063,000
Cost of goods sold
Direct materials	$	1,180,706
Direct labor		272,706
Machinery repairs (variable cost)		80,235
Depreciationplant equipment		330,000
Utilities (fixed cost is $148,000)		205,824
Plant management salaries		240,000			2,309,471
Gross profit					2,753,529
Selling expenses
Packaging		97,250
Shipping		128,294
Sales salary (annual)		278,000			503,544
General and administrative expenses
Advertising expense		138,000
Salaries		251,000
Entertainment expense		94,000			483,000
Income from operations				$	1,766,985

Required:
1.	Prepare a flexible budget performance report for 2013. (Do not round intermediate calculations.)

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