Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the...

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Tempo Companys fixed budget (based on sales of 14,000 units) for the first quarter reveals the following. Fixed Budget $2,81

Insurance 140,000 Office rent 150,000 660,000 $ 266,000 Income from operations (1) Compute the total variable cost per unit.

100, 000 Advertising Administrative expenses Administrative salaries Depreciation-office equip. 200,000 170,000 140,000 150,0

business accounting

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Answer 1

Answer #1

1) Calculation of Variable cost per unit

Direct materials (350000/14000)	$25
Direct labor (616000/14000)	44
Production supplies (364000/14000)	26
Sales commissions (98000/14000)	7
Packaging (210000/14000)	15
Total variable costs	$117

2) Calculation of Fixed costs

Plant manager salary	$150000
Advertising	100000
Administrative salaries	200000
Depreciation- office equipment	170000
Insurance	140000
Office rent	150000
Total fixed costs	$910000

3) Calculation of Income from operation for sales volume of 12000 units

Sales (12000*$201)		$2412000
Less: Variable costs
Direct materials (12000*$25)	300000
Direct labor (12000*$44)	528000
Production supplies (12000*$26)	312000
Sales commissions (12000*$7)	84000
Packaging (12000*$15)	180000
Total variable costs		1404000
Contribution margin		1008000
Less: Fixed costs
Plant manager salary	150000
Advertising	100000
Administrative salaries	200000
Depreciation- office equipment	170000
Insurance	140000
Office rent	150000
Total fixed costs		910000
Income from operations		$98000

4) Calculation of Income from operation for sales volume of 16000 units

Sales (16000*$201)		$3216000
Less: Variable costs
Direct materials (16000*$25)	400000
Direct labor (16000*$44)	704000
Production supplies (16000*$26)	416000
Sales commissions (16000*$7)	112000
Packaging (16000*$15)	240000
Total variable costs		1872000
Contribution margin		1344000
Less: Fixed costs
Plant manager salary	150000
Advertising	100000
Administrative salaries	200000
Depreciation- office equipment	170000
Insurance	140000
Office rent	150000
Total fixed costs		910000
Income from operations		$434000

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Answer 2

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