Required information Problem 21-1A 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,ee0 Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipeent (straight-1line) Utilities ($60,000 is variable) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries $ 960,000 240,000 60,000 315,000 180,000 210,000 es 1,965,000 1,185,000 75,e00 105,000 235,000 415,000 150,000 241,000 85,000 Entertainment expense 476,000 $ 294,000 Income from operations Required: 1&2. Prepare flexible budgets for the company at sales volumes of 14,000 and 16,000 unlts and classify all Items listed In the fixed budget as varle or fixed P ENIX COMPANY Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Variable Amount Total Fixed Cost Flexible Budget for: Units Sales of 14,000 Unit Sales of 16,000 per Unit Sales Variable costs Direct materials Direct labor Machinery repairs Ublities nces Packaging Shipping Total variable costs Contribution margin 0.00 0 Foxed costs Depreciation-Plant equipment (straight-line) Plant management salaries Utlities Sales salary Advertising expense Salaries Entertainment expense Total foxed costs S 0 S Problem 21-1A Part 3 3. The company's business conditions are Improving. One possible result is a sales volume of 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 budgeted amount of $294,000 if this level is reached without Increasing capacity? PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 15,000 18,000 Sales (in units) Contribution margin (per unil) Contribution margin Fixed costs Operating income Problem 21-1A Part 4 4.An unfavorable change in business is remotely possible: in this case, production and sales volume for the year could fall to 12,000 units. How much Income (or loss) from operations would occur if sales volume falls to this level? (Enter any loss with minus sign.) PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2019 15,000 12.000 Sales (in units) Contribution margin (per unit) Contribution margin Foxed costs Operating income (loss)