In: Accounting
Exercise 21-2 Preparing flexible budgets LO P1
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 | ||||||||
Sales (16,000 units) | $ | 3,232,000 | ||||||
Cost of goods sold | ||||||||
Direct materials | $ | 384,000 | ||||||
Direct labor | 688,000 | |||||||
Production supplies | 432,000 | |||||||
Plant manager salary | 184,000 | 1,688,000 | ||||||
Gross profit | 1,544,000 | |||||||
Selling expenses | ||||||||
Sales commissions | 144,000 | |||||||
Packaging | 240,000 | |||||||
Advertising | 100,000 | 484,000 | ||||||
Administrative expenses | ||||||||
Administrative salaries | 234,000 | |||||||
Depreciation—office equip. | 204,000 | |||||||
Insurance | 174,000 | |||||||
Office rent | 184,000 | 796,000 | ||||||
Income from operations | $ | 264,000 | ||||||
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.)
TEMPO COMPANYFlexible BudgetsFor Quarter Ended March 31, 2017------Flexible Budget------------Flexible Budget at ------Variable Amount per UnitTotal Fixed Cost14,000 units16,000 units18,000 unitsVariable costs:Fixed costs:
TEMPO COMPANY | |||||
Flexible Budgets | |||||
For Quarter Ended March 31, 2017 | |||||
------Flexible Budget------ | ------Flexible Budget at ------ | ||||
Variable Amount per Unit |
Total Fixed Cost | 14,000 units | 16,000 units | 18,000 units | |
Sales | 202 | 2,828,000 | 3,232,000 | 3,636,000 | |
Variable costs: | |||||
Direct materials | 24 | 336,000 | 384,000 | 432,000 | |
Direct labor | 43 | 602,000 | 688,000 | 774,000 | |
Production supplies | 27 | 378,000 | 432,000 | 486,000 | |
Sales commissions | 9 | 126,000 | 144,000 | 162,000 | |
Packaging | 15 | 210,000 | 240,000 | 270,000 | |
Total variable costs | 118 | 1652000 | 1888000 | 2124000 | |
Contribution margin | 84 | 1,176,000 | 1,344,000 | 1,512,000 | |
Fixed costs: | |||||
Plant manager salary | 184,000 | 184,000 | 184,000 | 184,000 | |
Advertising | 100,000 | 100,000 | 100,000 | 100,000 | |
Administrative salaries | 234,000 | 234,000 | 234,000 | 234,000 | |
Depreciation—office equip. | 204,000 | 204,000 | 204,000 | 204,000 | |
Insurance | 174,000 | 174,000 | 174,000 | 174,000 | |
Office rent | 184,000 | 184,000 | 184,000 | 184,000 | |
Total fixed costs | 1,080,000 | 1,080,000 | 1,080,000 | 1,080,000 | |
Income from operations | 96,000 | 264,000 | 432,000 |