Question

Tempo Company's fixed budget (based on sales of 16,000 units) for the first quarter reveals the following. Fixed Budget $3,296,000 $384,000 688,000 432,000 184,000 1,688,000 1,608,000 Sales (16,000 units x $206 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 144,000 256,000 100,000 500,000 234,000 204,000 174,000 184,000 796,000 312,000 $ (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 14,000 units. (4) Compute the income from operations for sales volume of 18,000 units.

Answer 1

Flexible Budget at TEMPO COMPANY Flexible Budgets Flexible Budget Variable Amount Per Total Fixed Unit Costs $ 206 14000 Units | 16000 Units | 18000 Units $ 2,884,000 S 3,296,000 $ 3,708,000 $ 336,000 $ 384,000 $ 432,000 $ 602,000 $ 688,000 $ 774,000 $ 378,000 $ 432,000 $ 486,000 $ 126,000 $ 144,000 $ 162,000 $ 224,000 | $ 256,000 $ 288,000 $ 1,666,000 $ 1,904,000 $ 2,142,000 S 1,218,000S 1,392,000S 1,566,000 16 87 Sales Variable Costs Direct Materials Direct Labour Production Supplides Sales Commissions Packging Total Variable Costs Contribution Margin Fixed Costs Plant Manager Salary Advertaising Administrative Salaries Depreciation - Office Equipment Insurance Office Rent Total Fixed Costs Income From Operations 1 Total Variable Cost per Unit 2 Total Fixed Costs 3 Net Operating income at 14,000 units 4 Net operating Income at 18,000 units $ $ $ $ $ $ $ 184,000 100,000 234,000 204,000 174,000 184,000 1,080,000 $ $ $ $ $ $ $ $ 184,000 100,000 234,000 204,000 174,000 184,000 1,080,000 138,000 $ 184,000 $ 184,000 $ 100,000 $ 100,000 $ 234,000 $ 234,000 $ 204,000 $ 204,000 $ 174,000 $ 174,000 $ 184,000 $ 184,000 $ 1,080,000 $ 1,080,000 S 312,000S 486,000 $ $ $ $ 119 1,080,000 138,000 486,000