Question

Tempo Companys fixed budget (based on sales of 16,000 units) for the first quarter of calendar year 2017 reveals the following Fixed Budget $3,264,000 Sales (16,000 units) Cost of goods sold Direct materials Direct labor Production supplies Plant manager salary $400,000 672,000 448,000 200,000 1,720,000 Gross profit Selling expenses 1,544,000 Sales commissions Packaging Advertising 128,000 256,000 100,000 484,000 Administrative expenses 250,000 220,000 190,000 200,000 Administrative salaries Depreciation-office equip. Insurance 860.000 s 200,000 Office rent Income from operations Complete the following flexible budgets for sales volumes of 14,000, 16,000, and 18,000 units. (Round cost per unit to 2 decimal places.)

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Answer #1
Flexible Budget
variable total 14,000 16,000 18,000
amount fixed cost units units units
per unit
Sales 204 2856000 3264000 3672000
Variable costs:
Direct materials 25 350000 400000 450000
direct labor 42 588000 672000 756000
production supplies 28 392000 448000 504000
Sales commissions 8 112000 128000 144000
packaging 16 224000 256000 288000
total variable costs 119 1666000 1904000 2142000
contribution margin 85 1190000 1360000 1530000
Fixed costs :
plant manager salary 200,000 200,000 200,000 200,000
Advertising 100,000 100,000 100,000 100,000
Administrative salaries 250,000 250,000 250,000 250,000
Depreciation -office Equip 220,000 220,000 220,000 220,000
insurance 190,000 190,000 190,000 190,000
office rent 200,000 200,000 200,000 200,000
total fixed costs 1,160,000 1,160,000 1,160,000 1,160,000
income from operations 30,000 200,000 370,000
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