Question

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following. Fixed Budget $ 2,996,000 $350,000 602,000 392,000 150,000 1,494,000 1,502,000 Sales (14,000 units X $214 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 126,000 210,000 100,000 436,000 200,000 170,000 140,000 150,000 660,000 406,000 $ (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 12,000 units. (4) Compute the income from operations for sales volume of 16,000 units.

Answer 1

Flexible Budget at TEMPO COMPANY Flexible Budgets Flexible Budget Variable Amount Per Total Fixed Unit Costs 214 12000 Units 14000 Units 16000 Units $2,568,000 $2,996,000 $3,424,000 $ 300,000 $ 350,000 $ 400,000 $ 516,000 $ 602,000 $ 688,000 $ 336,000 $ 392,000 $ 448.000 $ 108,000 $ 126,000 $ 144,000 $ 180,000 $ 210,000 $ 240,000 | $ 1,440,000 $ 1,680,000 | $ 1,920,000 $ 1,128,000 $1,316,000 $1,504,000 15 120 94 s Sales Variable Costs Direct Materials Direct Labour Production Supplides Sales Commissions Packging Total Variable Costs Contribution Margin Fixed Costs Plant Manager Salary advertaising Administrative Salaries Depreciation - Office Equipment Insurance Office Rent Total Fixed Costs Income From Operations $ $ $ $ $ $ $ 150,000 $ 150,000 $ 150,000 $ 150,000 100,000 $ 100,000 $ 100,000 $ 100,000 200,000 $ 200,000 $ 200,000 $ 200,000 170,000 $ 170,000 $ 170,000 $ 170,000 140,000 $ 140,000 $ 140,000 $ 140,000 150,000 $ 150,000 $ 150,000 $ 150,000 910,000$ 910,000 $ 910,000 $ 910,000 $ 218,000 $ 406,000 $ 594,000 1 Total Variable Cost per Unit 2 Total Fixed Costs $ 3 Net Operating income at 12,000 units $ 4 Net operating Income at 16,000 units $ 120 910,000 218,000 594,000