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. 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.

PHOENIX COMPANY

Fixed Budget Report

For Year Ended December 31, 2019

Sales $ 3,300,000

Cost of goods sold

Direct materials $ 900,000

Direct labor 225,000

Machinery repairs (variable cost) 45,000

Depreciation—Plant equipment (straight-line) 315,000

Utilities ($45,000 is variable) 210,000

Plant management salaries 220,000 1,915,000

Gross profit 1,385,000

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 $ 530,000