Question

Exercise 08-3 Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on sales of 16,000 units) for the first quarter reveals the following. Fixed Budget $3,392,000 $384,000 672,000 432,000 184,000 1,672,000 1,720,000 Sales (16,000 units x $212 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 144,000 240,000 100,000 484,000 234,000 204,000 174,000 184,000 796,000 440,000 $ (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. 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

Answer: Total variable cost per unit Total Fixed Cost Income from operation at 14000 units Income from operation at 18000 units 117 1080000 250000 630000

Explanation:

Variable Amount per unit Sales 212.00 Variable costs: Direct materials Direct labor Production supplies Sales Commissions Packaging 24.00 42.00 27.00 9.00 15.00 Variable costs per unit 117.00

Fixed costs: Plant management salary Advertising Administrative Salaries 184000 100000 234000 Depreciation office equipment 204000 Insurance 174000 Office rent 184000 Total Fixed costs 1080000

TEMPO COMPANY Fixed Budget Report For year Ended December 31, 2017 Flexible Budget Variable Amount per unit Units sales of 14000 Total Fixed Costs Sales Variable costs: Direct materials Direct labor Production supplies Sales Commissions Packaging 2968000 212.00 336000 24.00 588000 42,00 378000 27.00 9.00 126000 15.00 210000 Variable costs per unit Contribution margin Fixed costs: Plant management salary Advertising Administrative Salaries Depreciation office equipment 117.00 1638000 95.00 1330000 184000 184000 100000 100000 234000 234000 204000 204000 Insurance 174000 174000 Office rent 184000 184000 Total Fixed costs 1080000 1080000 Income from operations 250000

TEMPO COMPANY Fixed Budget Report For year Ended December 31, 2017 Flexible Budget Flexible Budget at Units sales of 14000 Units sales of 16000 Unit sales of 18000 Variable Amount per unit Total Fixed Costs Sales 212.00 2968000 3392000 3816000 Variable costs: Direct materials Direct labor Production supplies 336000 24.00 384000 432000 672000 42.00 588000 756000 432000 27.00 378000 486000 Sales Commissions 162000 9.00 126000 144000 Packaging 15.00 210000 240000 270000 Variable costs per unit Contribution margin Fixed costs: Plant management salary Advertising Administrative Salaries Depreciation office equipment 1872000 117.00 1638000 2106000 95.00 1330000 1520000 1710000 184000 184000 184000 184000 100000 100000 100000 100000 234000 234000 234000 234000 204000 204000 204000 204000 Insurance 174000 174000 174000 174000 Office rent 184000 184000 184000 184000 Total Fixed costs 1080000 1080000 1080000 1080000 Income from operations 440000 250000 630000