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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 15,000 units.   PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales       $ 3,000,000 Cost of goods sold           Direct materials $ 975,000       Direct labor   225,000       Machinery repairs (variable cost)   60,000       Depreciation—Plant equipment (straight-line)   300,000       Utilities ($45,000 is variable)   195,000       Plant management salaries   200,000     1,955,000 Gross profit         1,045,000 Selling expenses           Packaging   75,000       Shipping   105,000       Sales salary (fixed annual amount)   250,000     430,000 General and administrative expenses           Advertising expense   125,000       Salaries   241,000       Entertainment expense   90,000     456,000 Income from operations       $ 159,000     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’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       $ 3,000,000 Cost of goods sold           Direct materials $ 975,000       Direct labor   225,000       Machinery repairs (variable cost)   60,000       Depreciation—Plant equipment (straight-line)   300,000       Utilities ($45,000 is variable)   195,000       Plant management salaries   200,000     1,955,000 Gross profit         1,045,000 Selling expenses           Packaging   75,000       Shipping   105,000       Sales salary (fixed annual amount)   250,000     430,000 General and administrative expenses           Advertising expense   125,000       Salaries   241,000       Entertainment expense   90,000     456,000 Income from operations       $ 159,000     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.)

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter9: Profit Planning And Flexible Budgets
Section: Chapter Questions
Problem 48BEB: Performance Report Based on Budgeted and Actual Levels of Production Balboa Company budgeted...
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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 15,000 units.
 

PHOENIX COMPANY
Fixed Budget Report
For Year Ended December 31, 2019
Sales       $ 3,000,000
Cost of goods sold          
Direct materials $ 975,000      
Direct labor   225,000      
Machinery repairs (variable cost)   60,000      
Depreciation—Plant equipment (straight-line)   300,000      
Utilities ($45,000 is variable)   195,000      
Plant management salaries   200,000     1,955,000
Gross profit         1,045,000
Selling expenses          
Packaging   75,000      
Shipping   105,000      
Sales salary (fixed annual amount)   250,000     430,000
General and administrative expenses          
Advertising expense   125,000      
Salaries   241,000      
Entertainment expense   90,000     456,000
Income from operations       $ 159,000
 

 

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.)

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