Question

Tempo Company's fixed budget (based on sales of 18,000 units) for the first quarter reveals the following. Fixed Budget $3,798,000 $432,000 774,000 486,000 232,000 1,924,000 1,874,000 Sales (18,000 units * $211 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 144,000 270,000 100,000 514,000 282,000 252,000 222,000 232,000 988,000 372,000 $ (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.

Answer 1

117 Answer: Total variable cost per unit Total Fixed Cost Income from operation at 16,000 units Income from operation at 20,000 units 1320000 184000 560000

Explanation:

Flexible Budget Variable Amount per unit Total Fixed Costs 211.00 Flexible Budget at Units sales of 16,000 Units sales of 20,000 3376000 4220000 480000 Sales Variable costs: Direct materials Direct labor Production supplies Sales Commissions Packaging 24.00 43.00 384000 688000 860000 27.00 432000 540000 8.00 1280001 160000 300000 15.00 240000 1872000 117.00 94.00 2340000 1880000 15040001 232000 Variable costs per unit Contribution margin Fixed costs: Plant management salary Advertising Administrative Salaries Depreciation office equipment Insurance Office rent 232000 100000 282000 252000 222000 232000 100000 282000 100000 282000 252000 222000 232000 252000 222000 232000 232000 1320000 1320000 1320000 Total Fixed costs Income from operations 184000 560000