4. An unfavorable change in business is remotely possible; in this case, production and sales volume...

4. An unfavorable change in business is remotely possible; in this case, production and sales volume for 2017 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.)

Expert Solution

Answer 3.

PHOENIX COMPANY
Forecasted Contribution Margin Income Statement
For the Year Ended Dec 31, 2017
	Units Sold 15,000	Units Sold 18,000	Diference
Sales In Units	15,000.00	18,000.00
Contribution Margin (Per Unit)	111.00	111.00
Contribution Margin	1,665,000.00	1,998,000.00
Fixed Cost	1,331,000.00	1,331,000.00
Operating Income	334,000.00	667,000.00	333,000.00	(Expected Inc. (Dec.) in Operating Income)

	Flexible Budget
	Variable Amt. Per Unit	Total Fixed Cost
Sales	210.00
Variable Cost:
Direct Materials	65.00
Direct Labor	15.00
Machinery Repairs	4.00
Utilities	4.00
Packaging	5.00
Shipping	6.00
Total Variable Cost	99.00

Contribution	111.00

Fixed Cost
Depreciation - Plant Equipment		300,000.00
Utilities		150,000.00
Plant Management Salaries		200,000.00
Sales Salary		235,000.00
Advertising Expense		125,000.00
Salaries		241,000.00
Entertainment Expense		80,000.00
Total Fixed Cost		1,331,000.00

ekkarill92 answered 1 year ago

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