Tempo Companys fixed budget based on sales of 14000 units fo

Tempo Company\'s fixed budget (based on sales of 14,000 units) for the first quarter of calendar year 2017 reveals the following.

Complete the following flexible budgets for sales volumes of 12,000, 14,000, and 16,000 units. (Round cost per unit to 2 decimal places.)

	Fixed Budget
Sales (14,000 units)						$	3,066,000
Cost of goods sold
Direct materials		$	336,000
Direct labor			602,000
Production supplies			364,000
Plant manager salary			136,000				1,438,000
Gross profit							1,628,000
Selling expenses
Sales commissions			126,000
Packaging			210,000
Advertising			100,000				436,000
Administrative expenses
Administrative salaries			186,000
Depreciation—office equip.			156,000
Insurance			126,000
Office rent			136,000				604,000
Income from operations						$	588,000

Solution

Tempo Company Flexible Budget For Quarter Ended March 31, 2017 Units & Total Amount Variable Amout per Unit Fixed Cost 12,000 14,000 16,000 Sales $219 $2,628,000 $3,066,000 $3,504,000 Variable costs Direct materials $24 $288,000 $336,000 $384,000 Direct labor $43 $516,000 $602,000 $688,000 production supplies $26 $312,000 $364,000 $416,000 Sales commissions $9 $108,000 $126,000 $144,000 Packaging $15 $180,000 $210,000 $240,000 total variable costs $117 $1,404,000 $1,638,000 $1,872,000 Contribution margin $102 $1,224,000 $1,428,000 $1,632,000 Fixed costs: Plant manager salary $136,000 $136,000 $136,000 $136,000 Advertising $100,000 $100,000 $100,000 $100,000 Administrative salaries $186,000 $186,000 $186,000 $186,000 Depreciation -office Equipment $156,000 $156,000 $156,000 $156,000 Insurance $126,000 $126,000 $126,000 $126,000 Office rent $136,000 $136,000 $136,000 $136,000 total fixed costs $840,000 $840,000 $840,000 $840,000 income from operations $384,000 $588,000 $792,000