Tempo Company’s fixed budget (based on sales of 10,000 units) for the first quar

Question

Tempo Company’s fixed budget (based on sales of 10,000 units) for the first quarter of calendar year 2015 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.)

Tempo Company’s fixed budget (based on sales of 10,000 units) for the first quarter of calendar year 2015 reveals the following.

TEMPO COMPANY Flexible Budgets For Quarter Ended March 31, 2015 -Flexible Budget Flexible Budget at Variable Amount per Unit Total Fixed Cost 8,000 units 10,000 units 12,000 units Variable costs: 0.00 Fixed costs

Explanation / Answer

Tempo Company Flexible Budget Variable total 8000 units 10,000 12,000 amount fixed cost units units per unit Sales 217 1736000 2170000 2604000 Variable costs Direct materials 24 192000 240000 288000 Direct labor 43 344000 430000 516000 production supplies 28 224000 280000 336000 sales commissions 8 64000 80000 96000 packaging 15 120000 150000 180000 total variable costs 118 944000 1180000 1416000 contribution margin 792000 990000 1188000 fixed costs plant manager salary 40,000 40,000 40,000 40,000 advertising 100,000 100,000 100,000 100,000 administration salaries 90,000 90,000 90,000 90,000 depreciation-office equipment 60,000 60,000 60,000 60,000 insurance 30,000 30,000 30,000 30,000 office rent 40,000 40,000 40,000 40,000 total fixed cost 360,000 360,000 360,000 360,000 income from operations 432,000 630,000 828,000

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