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Exercise 08-3 Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on sales of 10,000...

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 × $213 per unit) $ 2,130,000
Cost of goods sold
Direct materials $ 250,000
Direct labor 420,000
Production supplies 280,000
Plant manager salary 50,000 1,000,000
Gross profit 1,130,000
Selling expenses
Sales commissions 90,000
Packaging 150,000
Advertising 100,000 340,000
Administrative expenses
Administrative salaries 100,000
Depreciation—office equip. 70,000
Insurance 40,000
Office rent 50,000 260,000
Income from operations $ 530,000


(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.

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Expert Solution

ekkarill92 answered 2 years ago
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