Tempo Company\'s fixed budget (based on sales of 14,000 units) for the first qua

Question

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter of calendar year 2017 reveals the following.

Complete the following flexible budgets for sales volumes of 12,000, 14,000, and 16,000 units. (Round cost per unit to 2 decimal places.)

Fixed Budget Sales (14,000 units) $ 3,066,000 Cost of goods sold Direct materials $ 336,000 Direct labor 602,000 Production supplies 364,000 Plant manager salary 136,000 1,438,000 Gross profit 1,628,000 Selling expenses Sales commissions 126,000 Packaging 210,000 Advertising 100,000 436,000 Administrative expenses Administrative salaries 186,000 Depreciation—office equip. 156,000 Insurance 126,000 Office rent 136,000 604,000 Income from operations $ 588,000

Explanation / Answer

Tempo Company Flexible Budget For Quarter Ended March 31, 2017 Units & Total Amount Variable Amout per Unit Fixed Cost 12,000 14,000 16,000 Sales $219 $2,628,000 $3,066,000 $3,504,000 Variable costs Direct materials $24 $288,000 $336,000 $384,000 Direct labor $43 $516,000 $602,000 $688,000 production supplies $26 $312,000 $364,000 $416,000 Sales commissions $9 $108,000 $126,000 $144,000 Packaging $15 $180,000 $210,000 $240,000 total variable costs $117 $1,404,000 $1,638,000 $1,872,000 Contribution margin $102 $1,224,000 $1,428,000 $1,632,000 Fixed costs: Plant manager salary $136,000 $136,000 $136,000 $136,000 Advertising $100,000 $100,000 $100,000 $100,000 Administrative salaries $186,000 $186,000 $186,000 $186,000 Depreciation -office Equipment $156,000 $156,000 $156,000 $156,000 Insurance $126,000 $126,000 $126,000 $126,000 Office rent $136,000 $136,000 $136,000 $136,000 total fixed costs $840,000 $840,000 $840,000 $840,000 income from operations $384,000 $588,000 $792,000

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