Question

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter reveals the following Fixed Budget $2,604,e00 Sales (12,00e units x $217 per unit) Cost of goods sold Direct materials Direct labor $276,e00 528,000 324,000 Production supplies Plant manager salary Gross profit Selling expenses Sales commissions Packaging Advertising Administrative expenses Administrative salaries Depreciation-office equip. Insurance office rent 1,204,000 1,400,000 76,000 84,000 192,000 100,000 376,000 126,000 96,000 66,000 76,000 364,000 $ 660,000 Income from operations (1) Compute the total variable cost per unit (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 10,000 units (4) Compute the income from operations for sales volume of 14,000 units

Answer 1

Answer: Total variable cost per unit Total Fixed Cost Income from operation at 10000 units Income from operation at 14000 units 117 540000 460000 860000

TEMPO COMPANY Fixed Budget Report For year Ended December 31, 2017 Flexible Budget Flexible Budget at Variable Amount per unit Total Fixed Costs Units sales of 10000 Units sales of 12000 Unit sales of 14000 Sales Variable costs: Direct materials Direct labor Production supplies 217.00 2170000 2604000 3038000 230000 276000 23.00 322000 440000 528000 44.00 616000 378000 270000 27.00 324000 Sales Commissions 70000 7,00 84000 98000 Packaging 192000 16.00 160000 224000 Total Variable costs Contribution margin Fixed costs: Plant management salary Advertising Administrative Salaries Depreciation office equipment 1404000 117.00 1170000 1638000 100.00 1200000 1000000 1400000 76000 76000 76000 76000 100000 100000 100000 100000 126000 126000 126000 126000 96000 96000 96000 96000 Insurance 66000 66000 66000 66000 Office rent 76000 76000 76000 76000 Total Fixed costs 540000 540000 540000 540000 Income from operations 460000 660000 860000