In: Accounting
Exercise 08-3 Preparing flexible budgets LO P1
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 × $219 per unit) | $ | 2,190,000 | ||||||
Cost of goods sold | ||||||||
Direct materials | $ | 240,000 | ||||||
Direct labor | 440,000 | |||||||
Production supplies | 270,000 | |||||||
Plant manager salary | 40,000 | 990,000 | ||||||
Gross profit | 1,200,000 | |||||||
Selling expenses | ||||||||
Sales commissions | 80,000 | |||||||
Packaging | 160,000 | |||||||
Advertising | 100,000 | 340,000 | ||||||
Administrative expenses | ||||||||
Administrative salaries | 90,000 | |||||||
Depreciation—office equip. | 60,000 | |||||||
Insurance | 30,000 | |||||||
Office rent | 40,000 | 220,000 | ||||||
Income from operations | $ | 640,000 | ||||||
(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.