connect ch-23 8-10
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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.
| PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2013 |
| Sales | $ | 3,300,000 | |||
| Cost of goods sold | |||||
| Direct materials | $ | 915,000 | |||
| Direct labor | 240,000 | ||||
| Machinery repairs (variable cost) | 45,000 | ||||
| Depreciation—plant equipment | 315,000 | ||||
| Utilities ($60,000 is variable) | 180,000 | ||||
| Plant management salaries | 200,000 | 1,895,000 | |||
| Gross profit | 1,405,000 | ||||
| Selling expenses | |||||
| Packaging | 75,000 | ||||
| Shipping | 105,000 | ||||
| Sales salary (fixed annual amount) | 235,000 | 415,000 | |||
| General and administrative expenses | |||||
| Advertising expense | 125,000 | ||||
| Salaries | 230,000 | ||||
| Entertainment expense | 85,000 | 440,000 | |||
| Income from operations | $ | 550,000 | |||
8.
Award: 10 out of 10.00 points
| 1&2 | 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. |
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