Question

Tempo Company's fixed budget for the first quarter of calendar year 2013 reveals the following.

  

Sales (14,000 units)						$	2,996,000
Cost of goods sold
Direct materials		$	334,320
Direct labor			593,740
Production supplies			372,400
Plant manager salary			134,320				1,434,780
Gross profit							1,561,220
Selling expenses
Sales commissions			110,880
Packaging			197,400
Advertising			100,000				408,280
Administrative expenses
Administrative salaries			184,320
Depreciation—office equip.			154,320
Insurance			124,320
Office rent			134,320				597,280
Income from operations						$	555,660

  

Prepare flexible budgets that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 12,000, 14,000, and 16,000 units. (Round cost per unit to 2 decimal places.)

Answer 1

TEMPO COMPANY Fixed Budget Report For year Ended December 31, 2017 Flexible Budget Variable Amount per unit Total Fixed Costs Units sales of 12000 214.00 2568000 Flexible Budget at Units sales of 14000 Unit sales of 16000 2996000 3424000 Sales Variable costs: Direct materials Direct labor Production supplies Sales Commissions Packaging 23.88 42.41 26.60 7.92 14.10 286560 508920 319200 95040 169200 334320 593740 372400 110880 197400 382080 678560 425600 126720 225600 114.91 99.09 1378920 1189080 1608740 1387260) 1838560 1585440 Total Variable costs Contribution margin Fixed costs: Plant management salary Advertising Administrative Salaries Depreciation office equipment Insurance Office rent 134320 100000 184320 154320 124320 134320 134320 100000 184320 154320 124320 134320 1343201 100000 184320 154320 124320 134320 134320 100000 184320 1543201 124320 134320 831600 Total Fixed costs Income from operations 831600 357480 831600 555660 831600 753840