Tempo Company\'s fixed budget (based on sales of 12,000 units) for the first qua

Question

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter of calendar year 2017 reveals the following.

Complete the following flexible budgets for sales volumes of 10,000, 12,000, and 14,000 units. (Round cost per unit to 2 decimal places.)

Fixed Budget Sales (12,000 units) $ 2,604,000 Cost of goods sold Direct materials $ 288,000 Direct labor 516,000 Production supplies 336,000 Plant manager salary 88,000 1,228,000 Gross profit 1,376,000 Selling expenses Sales commissions 84,000 Packaging 180,000 Advertising 100,000 364,000 Administrative expenses Administrative salaries 138,000 Depreciation—office equip. 108,000 Insurance 78,000 Office rent 88,000 412,000 Income from operations $ 600,000

Explanation / Answer

TEMPO COMPANY Flexible Budgets For the Quarter Ended March, 31 2017 Flexible Budget Flexible Budget at Variable Amount Per Unit Total Fixed Costs 10000 Units 12000 Units 14000 Units A Sales 217.00 2170000 2604000 3038000 Variable Costs: Direct Material 24.00 240000 288000 336000 All Variable Costs PU have been calculated by Dividing the Each Component Cost by Units i.e.12000) Direct Labor 43.00 430000 516000 602000 Production Supplies 28.00 280000 336000 392000 Sales Commission 7.00 70000 84000 98000 Packaging 15.00 150000 180000 210000 B Total Variable Costs: 117.00 1170000 1404000 1638000 Fixed Costs: Plant Manager Salary 88000 88000 88000 88000 Advertising 100000 100000 100000 100000 Administrative Salaries 138000 138000 138000 138000 Depreciation-Office Equipment 108000 108000 108000 108000 Insurance 78000 78000 78000 78000 Office Rent 88000 88000 88000 88000 C Total Fixed Costs: 600000 600000 600000 600000 (A-B-C) Net Income 400000 600000 800000

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