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

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Accounting

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

Fixed Budget
Sales (12,000 units)$2,436,000
Cost ofgoods sold
Directmaterials$288,000
Directlabor516,000
Production supplies324,000
Plantmanager salary88,0001,216,000
Grossprofit1,220,000
Sellingexpenses
Salescommissions96,000
Packaging192,000
Advertising100,000388,000
Administrative expenses
Administrative salaries138,000
Depreciation—office equip.108,000
Insurance78,000
Officerent88,000412,000
Incomefrom operations$420,000


Complete the following flexible budgets for sales volumes of10,000, 12,000, and 14,000 units. (Round cost per unit to 2 decimalplaces.)

Answer & Explanation Solved by verified expert
4.2 Ratings (532 Votes)

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 203 2,030,000 2,436,000 2,842,000
Variable costs:
Direct materials 24 240,000 288,000 336,000
Direct labor 43 430,000 516,000 602,000
Production supplies 27 270,000 324,000 378,000
Sales commissions 8 80,000 96,000 112,000
Packaging 16 160,000 192,000 224,000
Total variable costs 118 1180000 1416000 1652000
Contribution margin 85 850,000 1,020,000 1,190,000
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 250,000 420,000 590,000

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