Question

Tempo Company's fixed budget (based on sales of 10,000 units) for the first quarter reveals the following. Fixed Budget Sales (10,000 units × $204 per unit) $ 2,040,000 Cost of goods sold Direct materials $ 230,000 Direct labor 430,000 Production supplies 270,000 Plant manager salary 30,000 960,000 Gross profit 1,080,000 Selling expenses Sales commissions 80,000 Packaging 140,000 Advertising 100,000 320,000 Administrative expenses Administrative salaries 80,000 Depreciation—office equip. 50,000 Insurance 20,000 Office rent 30,000 180,000 Income from operations $ 580,000 (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 8,000 units. (4) Compute the income from operations for sales volume of 12,000 units.

	Fixed Budget
Sales (10,000 units × $204 per unit)						$	2,040,000
Cost of goods sold
Direct materials		$	230,000
Direct labor			430,000
Production supplies			270,000
Plant manager salary			30,000				960,000
Gross profit							1,080,000
Selling expenses
Sales commissions			80,000
Packaging			140,000
Advertising			100,000				320,000
Administrative expenses
Administrative salaries			80,000
Depreciation—office equip.			50,000
Insurance			20,000
Office rent			30,000				180,000
Income from operations						$	580,000

Answer 1