Exercise 21-2 Preparing flexible budgets LO P1 Tempo Company\'s fixed budget (ba

Question

Exercise 21-2 Preparing flexible budgets LO P1

Tempo Company's fixed budget (based on sales of 10,000 units) for the first quarter of calendar year 2017 reveals the following.

Complete the following flexible budgets for sales volumes of 8,000, 10,000, and 12,000 units. (Round cost per unit to 2 decimal places.)

Fixed Budget Sales (10,000 units) $ 2,150,000 Cost of goods sold Direct materials $ 250,000 Direct labor 420,000 Production supplies 260,000 Plant manager salary 50,000 980,000 Gross profit 1,170,000 Selling expenses Sales commissions 70,000 Packaging 150,000 Advertising 100,000 320,000 Administrative expenses Administrative salaries 100,000 Depreciation—office equip. 70,000 Insurance 40,000 Office rent 50,000 260,000 Income from operations $ 590,000

Explanation / Answer

TEMPO COMPANY Flexible Budgets For Quarter Ended March 31, 2017 ------Flexible Budget------ ------Flexible Budget at ------ Variable Amount per Unit Total Fixed Cost 8,000 units 10,000 units 12,000 units Sales $215 $1,720,000 $2,150,000 $2,580,000 Variable costs: Direct materials 25 $200,000 $250,000 $300,000 Direct labor 42 $336,000 $420,000 $504,000 Production supplies 26 $208,000 $260,000 $312,000 Sales commissions 7 $56,000 $70,000 $84,000 Packaging 15 $120,000 $150,000 $180,000 Total variable costs 115 920000 1150000 1380000 Contribution margin $100 $800,000 $1,000,000 $1,200,000 Fixed costs: Plant manager salary 50,000 50,000 50,000 50,000 Advertising 100,000 100,000 100,000 100,000 Administrative salaries 100,000 100,000 100,000 100,000 Depreciation—office equip. 70,000 70,000 70,000 70,000 Insurance 40,000 40,000 40,000 40,000 Office rent 50,000 50,000 50,000 50,000 Total fixed costs 410,000 410,000 410,000 410,000 Income from operations $390,000 $590,000 $790,000

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.