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Exercise 21-3 Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on sales of 18,000...

Exercise 21-3 Preparing flexible budgets LO P1

Tempo Company's fixed budget (based on sales of 18,000 units) for the first quarter reveals the following.

Fixed Budget
Sales (18,000 units × $206 per unit) $ 3,708,000
Cost of goods sold
Direct materials $ 432,000
Direct labor 774,000
Production supplies 504,000
Plant manager salary 232,000 1,942,000
Gross profit 1,766,000
Selling expenses
Sales commissions 126,000
Packaging 288,000
Advertising 100,000 514,000
Administrative expenses
Administrative salaries 282,000
Depreciation—office equip. 252,000
Insurance 222,000
Office rent 232,000 988,000
Income from operations $ 264,000


(1) Compute the total variable cost per unit.
(2) Compute the total fixed costs.
(3) Compute the income from operations for sales volume of 16,000 units.
(4) Compute the income from operations for sales volume of 20,000 units.

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Answer #1

1 Total Variable Cost PO = Cost of goods Sold & Selling star Not & Onits 1,942,000 + 514000 1 8000 13644 2 Cost Poc 136.46 Va384) Computation of Income from operations Particulars 16000 Chits a) Sale Onits 16000 6) Sales Volume Cax 206) 3296000 c) Co

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