Question

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter reveals the following. Fixed Budget Sales (12,000 units × $211 per unit) $ 2,532,000 Cost of goods sold Direct materials $ 288,000 Direct labor 516,000 Production supplies 312,000 Plant manager salary 88,000 1,204,000 Gross profit 1,328,000 Selling expenses Sales commissions 96,000 Packaging 180,000 Advertising 100,000 376,000 Administrative expenses Administrative salaries 138,000 Depreciation—office equip. 108,000 Insurance 78,000 Office rent 88,000 412,000 Income from operations $ 540,000 (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 10,000 units. (4) Compute the income from operations for sales volume of 14,000 units.

Can you also include a formula to find these answers? I am having trouble finding the sales at 10,000

Answer 1

TEMPO COMPANY Flexible Budgets For Quarter Ended March 31 -Flexible Budget- --Flexible Budget at Variable Total 10,000 units 12,000 units 14,000 units Amount Fixed Cost per Unit $211 Sales Variable costs: $2,110,000 $2,532,000 $2,954,000 $240,000 $430,000 $288,000 $336,000 $516,000 $602,000 $24 Direct materials $43 Direct labor Production $260,000 $312,000$364,000| $26 supplies Sales $96,000 $112,000 $80,000 $150,000 $180,000$210,000 $8 commissions Packaging $15 Total variable $1,160,000 $1,392,000 $1,624,000 $116 costs Contribution $950,000 $1,140,000 $1,330,000 $95 margin Fixed costs Plant manager salary Advertising $88,000 $88,000 $88,000 $88,000 $100,000 $100,000 $100,000 $100,000 Administrative $138,000 $138,000 $138,000 $138,000 salaries Depreciation- office equip $108,000 $108,000 $108,000$108,000 $78,000 $88,000 $78,000 $88,000 $78,000 $88,000 $78,000 $88,000 Insurance Office rent Total fixed costs Income from operations $600,000 $600,000$600,000 $600,000 $350,000 $540,000 $730,000