Tempo Company\'s fixed budget (based on sales of 10,000 units) for the first qua

Question

Tempo Company's fixed budget (based on sales of 10,000 units) for the first quarter of calendar year 2017 reveals the following Fixed Budget $2,060,000 Sales (10,000 units) Cost of goods sold Direct materials Direct labor Production supplies Plant manager salary $230,000 430,000 270,000 30,000 960000 1,100,000 Gross profit Selling expenses Sales commissions Packaging Advertising 80,000 140,000 100,000 320,000 Administrative expenses Administrative salaries Depreciation-office equip. Insurance Office rent 80,000 50,000 20,000 30,000 80 1000 $600,000 Income from operations 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.)

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 $206 $1,648,000 $2,060,000 $2,472,000 Variable costs: Direct materials 23 $184,000 $230,000 $276,000 Direct labor 43 $344,000 $430,000 $516,000 Production supplies 27 $216,000 $270,000 $324,000 Sales commissions 8 $64,000 $80,000 $96,000 Packaging 14 $112,000 $140,000 $168,000 Total variable costs 115 920000 1150000 1380000 Contribution margin $91.00 $728,000 $910,000 $1,092,000 Fixed costs: Plant manager salary 30,000 30,000 30,000 30,000 Advertising 100,000 100,000 100,000 100,000 Administrative salaries 80,000 80,000 80,000 80,000 Depreciation—office equip. 50,000 50,000 50,000 50,000 Insurance 20,000 20,000 20,000 20,000 Office rent 30,000 30,000 30,000 30,000 Total fixed costs 310,000 310,000 310,000 310,000 Income from operations $418,000 $600,000 $782,000

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