Tempo Companys fixed budget based on sales of 16000 units fo

Tempo Company\'s fixed budget (based on sales of 16,000 units) for the first quarter of calendar year 2017 reveals the following Fixed Budget $3,264,000 Sales (16,000 units) Cost of goods sold Direct materials Direct labor Production supplies Plant manager salary $400,000 672,000 448,000 200,000 1,720,000 Gross profit Selling expenses 1,544,000 Sales commissions Packaging Advertising 128,000 256,000 100,000 484,000 Administrative expenses 250,000 220,000 190,000 200,000 Administrative salaries Depreciation-office equip. Insurance 860.000 s 200,000 Office rent Income from operations Complete the following flexible budgets for sales volumes of 14,000, 16,000, and 18,000 units. (Round cost per unit to 2 decimal places.)

Solution

Flexible Budget variable total 14,000 16,000 18,000 amount fixed cost units units units per unit Sales 204 2856000 3264000 3672000 Variable costs: Direct materials 25 350000 400000 450000 direct labor 42 588000 672000 756000 production supplies 28 392000 448000 504000 Sales commissions 8 112000 128000 144000 packaging 16 224000 256000 288000 total variable costs 119 1666000 1904000 2142000 contribution margin 85 1190000 1360000 1530000 Fixed costs : plant manager salary 200,000 200,000 200,000 200,000 Advertising 100,000 100,000 100,000 100,000 Administrative salaries 250,000 250,000 250,000 250,000 Depreciation -office Equip 220,000 220,000 220,000 220,000 insurance 190,000 190,000 190,000 190,000 office rent 200,000 200,000 200,000 200,000 total fixed costs 1,160,000 1,160,000 1,160,000 1,160,000 income from operations 30,000 200,000 370,000