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Exercise 21-2 Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on sales of 16,000...

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:

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Expert Solution

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

ekkarill92 answered 1 year ago
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