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Phoenix Company's 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 17,000 units. $3,825,000 PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales Cost of goods sold Direct materials $1,105,000 Direct labor 170,000 Machinery repairs (variable cost) 68,000 Depreciation-Plant equipment (straight-line) 330,000 Utilities ($51,000 is variable) 201,000 Plant management salaries 215,000 Gross profit Selling expenses Packaging 85,000 Shipping 119,000 Sales salary (fixed annual amount) 260,000 General and administrative expenses Advertising expense 133,000 Salaries 261,000 Entertainment expense 100,000 Income from operations 2,089,000 1,736,000 464,000 494,000 778,000 $ Phoenix Company's actual income statement for 2019 follows. $4,578,000 PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019 Sales (20,000 units) Cost of goods sold Direct materials $1,315,000 Direct labor 207,000 Machinery repairs (variable cost) 72,000 Depreciation-Plant equipment (straight-line) 330,000 Utilities (fixed cost is $147,500) 206,750 Plant management salaries 224,000 Gross profit Selling expenses Packaging 97,500 Shipping 132,500 Sales salary (annual) 278,000 General and administrative expenses Advertising expense 141,000 Salaries 261,000 Entertainment expense 103,500 Income from operations 2,354,750 2,223,250 508,000 505,500 $1,209,750 Required: 1. Prepare a flexible budget performance report for 2019. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.) PHOENIX COMPANY Flexible Budget Performance Report For Year Ended December 31, 2019 Flexible Budget Actual Results Variances $ 4,578,000 Fav. / Unfav. Sales Variable costs Direct materials 1,315,000 Direct labor 207,000 Machinery repairs 72,000 Utilities 59,250 Packaging 97,500 Shipping 132,500 Total variable costs 1,883,250 0 Contribution margin Fixed costs DepreciationPlant equipment (straight-line) Utilities Plant management salaries Sales salary Advertising expense Salaries Entertainment expense Total fixed costs 0 0 Income from operations

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