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 Fixed Budget $2,424,000 Sales (12,000 units) Cost of goods sold Direct materials Direct labor Production supplies Plant manager salary $288,000 516,000 312,000 88,000 1,204,000 1,220,000 Gross profit Selling expenses Sales commissions Packaging Advertising 96,000 180,000 100,000 376,000 Administrative expenses Administrative salaries Depreciation-office equip. Insurance Office rent 138,000 108,000 78,000 88,000 123900 432,000 Income from operations 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.)

Explanation / Answer

TEMPO COMPANY Flexible Budgets For Quarter Ended March 31, 2017 ------Flexible Budget------ ------Flexible Budget at ------ Variable Amount per Unit Total Fixed Cost 10,000 units 12,000 units 14,000 units Sales $202.00 $2,020,000 $2,424,000 $2,828,000 Variable costs: Direct materials $24.00 $240,000 288,000 $336,000 Direct labor $43.00 $430,000 516,000 $602,000 Production supplies $26.00 $260,000 312,000 $364,000 Sales commissions $8.00 $80,000 96,000 $112,000 Packaging $15.00 $150,000 180,000 $210,000 Total variable costs $116.00 1160000 1,392,000 1624000 Contribution margin $86.00 $860,000 $1,032,000 $1,204,000 Fixed costs: Plant manager salary 88,000 88,000 88,000 88,000 Advertising 100,000 100,000 100,000 100,000 Administrative salaries 138,000 138,000 138,000 138,000 Depreciation—office equip. 108,000 108,000 108,000 108,000 Insurance 78,000 78,000 78,000 78,000 Office rent 88,000 88,000 88,000 88,000 Total fixed costs 600,000 600,000 600,000 600,000 Income from operations $260,000 $432,000 $604,000

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