Question

Tempo Company's fixed budget (based on sales of 18,000 units) for the first quarter reveals the following. Fixed Budget Sales (18,000 units × $217 per unit) $ 3,906,000 Cost of goods sold Direct materials $ 414,000 Direct labor 756,000 Production supplies 504,000 Plant manager salary 214,000 1,888,000 Gross profit 2,018,000 Selling expenses Sales commissions 126,000 Packaging 252,000 Advertising 100,000 478,000 Administrative expenses Administrative salaries 264,000 Depreciation—office equip. 234,000 Insurance 204,000 Office rent 214,000 916,000 Income from operations $ 624,000 (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations for sales volume of 16,000 units. (4) Compute the income from operations for sales volume of 20,000 units.

Fixed Budget
Sales (18,000 units × $217 per unit)						$	3,906,000
Cost of goods sold
Direct materials		$	414,000
Direct labor			756,000
Production supplies			504,000
Plant manager salary			214,000				1,888,000
Gross profit							2,018,000
Selling expenses
Sales commissions			126,000
Packaging			252,000
Advertising			100,000				478,000
Administrative expenses
Administrative salaries			264,000
Depreciation—office equip.			234,000
Insurance			204,000
Office rent			214,000				916,000
Income from operations						$	624,000

Answer 1