phoenix company reports the following fixed budget. it is based on an expected production and sales volume…

phoenix company reports the following fixed budget. it is based on an expected production and sales volume of 15,400 units. phoenix company fixed budget for year ended december 31 sales $ 3,080,000 costs direct materials 1,001,000 direct labor 246,400 sales staff commissions 46,200 depreciation—machinery 300,000 supervisory salaries 202,000 shipping 246,400 sales staff salaries (fixed annual amount) 254,000 administrative salaries 430,000 depreciation—office equipment 200,000 income $ 154,000 phoenix company reports the following actual results. actual sales were 18,400 units. sales (18,400 units) $ 3,726,000 costs direct materials $ 1,210,720 direct labor 301,760 sales staff commissions 46,000 depreciation—machinery 300,000 supervisory salaries 213,000 shipping 286,120 sales staff salaries (fixed annual amount) 271,000 administrative salaries 439,000 depreciation—office equipment 200,000 income 458,400 required: prepare a flexible budget performance report for the year. note: indicate the effect of each variance by selecting \favorable\ or \unfavorable\. select \no variance\ and enter \0\ for zero variance.

phoenix company reports the following fixed budget. it is based on an expected production and sales volume of 15,400 units. phoenix company fixed budget for year ended december 31 sales $ 3,080,000 costs direct materials 1,001,000 direct labor 246,400 sales staff commissions 46,200 depreciation—machinery 300,000 supervisory salaries 202,000 shipping 246,400 sales staff salaries (fixed annual amount) 254,000 administrative salaries 430,000 depreciation—office equipment 200,000 income $ 154,000 phoenix company reports the following actual results. actual sales were 18,400 units. sales (18,400 units) $ 3,726,000 costs direct materials $ 1,210,720 direct labor 301,760 sales staff commissions 46,000 depreciation—machinery 300,000 supervisory salaries 213,000 shipping 286,120 sales staff salaries (fixed annual amount) 271,000 administrative salaries 439,000 depreciation—office equipment 200,000 income 458,400 required: prepare a flexible budget performance report for the year. note: indicate the effect of each variance by selecting \favorable\ or \unfavorable\. select \no variance\ and enter \0\ for zero variance.

Answer

Explanation:

Step1: Calculate per - unit amounts for variable costs in fixed budget

Direct materials per unit in fixed budget = $\frac{1001000}{15400}=65$ Direct labor per unit in fixed budget = $\frac{246400}{15400}=16$ Sales staff commissions per unit in fixed budget = $\frac{46200}{15400}=3$ Shipping per unit in fixed budget = $\frac{246400}{15400}=16$

Step2: Prepare flexible budget amounts for actual sales volume (18400 units)

Sales in flexible budget = $\frac{3080000}{15400}\times18400 = 3680000$ Direct materials in flexible budget = $65\times18400 = 1196000$ Direct labor in flexible budget = $16\times18400 = 294400$ Sales staff commissions in flexible budget = $3\times18400 = 55200$ Shipping in flexible budget = $16\times18400 = 294400$

Fixed costs remain the same in flexible budget as in fixed budget: Depreciation - Machinery = 300000 Supervisory salaries = 202000 Sales staff salaries (fixed) = 254000 Administrative salaries = 430000 Depreciation - Office equipment = 200000

Step3: Calculate variances

Sales variance

Sales variance = Actual sales - Flexible - budget sales = $3726000 - 3680000=46000$ (Favorable)

Direct materials variance

Direct materials variance = Actual direct materials - Flexible - budget direct materials = $1210720 - 1196000 = 14720$ (Unfavorable)

Direct labor variance

Direct labor variance = Actual direct labor - Flexible - budget direct labor = $301760 - 294400 = 7360$ (Unfavorable)

Sales staff commissions variance

Sales staff commissions variance = Actual sales staff commissions - Flexible - budget sales staff commissions = $46000 - 55200=-9200$ (Favorable)

Shipping variance

Shipping variance = Actual shipping - Flexible - budget shipping = $286120 - 294400=-8280$ (Favorable)

Depreciation - Machinery variance

Depreciation - Machinery variance = Actual depreciation - Machinery - Flexible - budget depreciation - Machinery = $300000 - 300000 = 0$ (No variance)

Supervisory salaries variance

Supervisory salaries variance = Actual supervisory salaries - Flexible - budget supervisory salaries = $213000 - 202000 = 11000$ (Favorable)

Sales staff salaries (fixed) variance

Sales staff salaries (fixed) variance = Actual sales staff salaries (fixed) - Flexible - budget sales staff salaries (fixed) = $271000 - 254000 = 17000$ (Unfavorable)

Administrative salaries variance

Administrative salaries variance = Actual administrative salaries - Flexible - budget administrative salaries = $439000 - 430000 = 9000$ (Unfavorable)

Depreciation - Office equipment variance

Depreciation - Office equipment variance = Actual depreciation - Office equipment - Flexible - budget depreciation - Office equipment = $200000 - 200000 = 0$ (No variance)

Income variance

Flexible - budget income = Sales in flexible budget-(Direct materials in flexible budget + Direct labor in flexible budget+Sales staff commissions in flexible budget + Shipping in flexible budget+Depreciation - Machinery+Supervisory salaries+Sales staff salaries (fixed)+Administrative salaries+Depreciation - Office equipment) = $3680000-(1196000 + 294400+55200 + 294400+300000+202000+254000+430000+200000)$ = $3680000 - 3226000=454000$ Actual income = 458400 Income variance = Actual income - Flexible - budget income = $458400 - 454000 = 4400$ (Favorable)

Category Flexible Budget Actual Variance Favorable/Unfavorable
Sales $3,680,000$ $3,726,000$ $46,000$ Favorable
Direct materials $1,196,000$ $1,210,720$ $14,720$ Unfavorable
Direct labor $294,400$ $301,760$ $7,360$ Unfavorable
Sales staff commissions $55,200$ $46,000$ $-9,200$ Favorable
Shipping $294,400$ $286,120$ $-8,280$ Favorable
Depreciation - Machinery $300,000$ $300,000$ $0$ No variance
Supervisory salaries $202,000$ $213,000$ $11,000$ Favorable
Sales staff salaries (fixed) $254,000$ $271,000$ $17,000$ Unfavorable
Administrative salaries $430,000$ $439,000$ $9,000$ Unfavorable
Depreciation - Office equipment $200,000$ $200,000$ $0$ No variance
Income $454,000$ $458,400$ $4,400$ Favorable

Answer:

See the above - prepared flexible budget performance report.