Phoenix Company's 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units.

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 2017 budgeted amount of $159,000 if this level is reached without increasing capacity?

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PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($45,000 is variable) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations $975,000 225,000 60,000 $3,000,000 300,000 195,000 200,000 1,955,000 1,045,000 75,000 105,000 250,000 430,000 125,000 241,000 90,000 456,000 $ 159,000 PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 18,000 15,000 Sales (in units) Contribution margin (per unit) Contribution margin Fixed costs Operating income PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 Sales Cost of goods sold Direct materials Direct labor Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($45,000 is variable) Plant management salaries Gross profit Selling expenses Packaging Shipping Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations $975,000 225,000 60,000 $3,000,000 300,000 195,000 200,000 1,955,000 1,045,000 75,000 105,000 250,000 430,000 125,000 241,000 90,000 456,000 $ 159,000 PHOENIX COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2017 18,000 15,000 Sales (in units) Contribution margin (per unit) Contribution margin Fixed costs Operating income

Answer rating: 100% (QA)

ANSWER Operating income is the number of profits a corporation generates from its middle operations ... View the full answer