Question

Exercise 08-3 Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following. Fixed Budget $2,926,000 $350,000 602,000 378,000 150,000 1,480,000 1,446,000 Sales (14,000 units X $209 per unit) Cost of goods sold Direct materials Direct labor Production supplies Plant manager salary Gross profit Selling expenses Sales commissions Packaging Advertising Administrative expenses Administrative salaries Depreciation-office equip. Insurance Office rent Income from operations 126,000 210,000 100,000 436,000 200,000 170,000 140,000 150,000 660,000 350,000 $ (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 12,000 units. (4) Compute the income from operations for sales volume of 16,000 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the total variable cost per unit. Variable cost per unit < Required 1 Required 2 >

Answer 1

	Variable Amount per Unit	Total Fixed Cost
Sales	209.00		=2926000/14000
Variable costs:
Direct materials	25.00		=350000/14000
Direct labor	43.00		=602000/14000
Production supplies	27.00		=378000/14000
Sales commissions	9.00		=126000/14000
Packaging	15.00		=210000/14000
Total variable costs	119.00
Contribution margin	90.00
Fixed costs:
Plant manager salary		150,000
Advertising		100,000
Administrative salaries		200,000
Depreciation—office equip.		170,000
Insurance		140,000
Office rent		150,000
Total fixed costs		910,000
1
Variable cost per unit	119
2
Total fixed costs	910000
3
Income from Operations at sales of 12000 units	170000	=(12000*90)-910000
4
Income from Operations at sales of 16000 units	530000	=(16000*90)-910000