Question

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter of calendar year 2017 reveals the following.

	Fixed Budget
Sales (14,000 units)						$	3,066,000
Cost of goods sold
Direct materials		$	336,000
Direct labor			602,000
Production supplies			364,000
Plant manager salary			136,000				1,438,000
Gross profit							1,628,000
Selling expenses
Sales commissions			126,000
Packaging			210,000
Advertising			100,000				436,000
Administrative expenses
Administrative salaries			186,000
Depreciation—office equip.			156,000
Insurance			126,000
Office rent			136,000				604,000
Income from operations						$	588,000

Complete the following flexible budgets for sales volumes of 12,000, 14,000, and 16,000 units. (Round cost per unit to 2 decimal places.)

	TEMPO COMPANY Flexible Budgets For Quarter Ended March 31, 2017 ------Flexible Budget------ ------Flexible Budget at ------ Variable Amount per Unit Total Fixed Cost 12,000 units 14,000 units 16,000 units Variable costs: 0.00 0 0 0 Fixed costs: 0 0 0 0

Answer 1

Tempo Company
Flexible Budget For Quarter Ended March 31, 2017
			Units & Total Amount
	Variable Amout per Unit	Fixed Cost	12,000	14,000	16,000
Sales	$219		$2,628,000	$3,066,000	$3,504,000
Variable costs
Direct materials	$24		$288,000	$336,000	$384,000
Direct labor	$43		$516,000	$602,000	$688,000
production supplies	$26		$312,000	$364,000	$416,000
Sales commissions	$9		$108,000	$126,000	$144,000
Packaging	$15		$180,000	$210,000	$240,000
total variable costs	$117		$1,404,000	$1,638,000	$1,872,000
Contribution margin	$102		$1,224,000	$1,428,000	$1,632,000
Fixed costs:
Plant manager salary		$136,000	$136,000	$136,000	$136,000
Advertising		$100,000	$100,000	$100,000	$100,000
Administrative salaries		$186,000	$186,000	$186,000	$186,000
Depreciation -office Equipment		$156,000	$156,000	$156,000	$156,000
Insurance		$126,000	$126,000	$126,000	$126,000
Office rent		$136,000	$136,000	$136,000	$136,000
total fixed costs		$840,000	$840,000	$840,000	$840,000
income from operations			$384,000	$588,000	$792,000