Question

Exercise 23-3 Preparing flexible budgets LO P1

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter reveals the following.

	Fixed Budget
Sales (12,000 units × $212 per unit)						$	2,544,000
Cost of goods sold
Direct materials		$	300,000
Direct labor			528,000
Production supplies			336,000
Plant manager salary			100,000				1,264,000
Gross profit							1,280,000
Selling expenses
Sales commissions			96,000
Packaging			168,000
Advertising			100,000				364,000
Administrative expenses
Administrative salaries			150,000
Depreciation—office equip.			120,000
Insurance			90,000
Office rent			100,000				460,000
Income from operations						$	456,000

(1) Compute the total variable cost per unit.
(2) Compute the total fixed costs.
(3) Compute the income from operations for sales volume of 10,000 units.
(4) Compute the income from operations for sales volume of 14,000 units.

I need 3 and 4 answered please and thank you

Answer 1

Answer 1 - Total variable cost per unit.

Total variable costs = Direct material+Direct labor+Production supplies+Sales commissions+Packaging
              = $300,000 + $528,000 + $336,000 + $96,000 + $168,000
                                 = $1,428,000

Total variable cost per unit = Total variable costs/Number of units
                                              = $1,428,000/12,000 units   
                                                  = $119 per unit

Answer 2 - Total Fixed Cost

Fixed Costs :	Amount
Plant manager salary	$100,000
Advertising	$100,000
Administrative salaries	$150,000
Depreciation - Office equipment	$120,000
Insurance	$90,000
Office rent	$100,000
Total fixed cost	$660,000

Answer 3 :    

Compute the Income from operations for sales volume of 10,000 units.

Particulars	Amount
Sales (10,000 *$212)	$2,120,000
Less: Variable expenses (10,000 * $119)	$1,190,000
Contribution margin	$930,000
Less: Fixed expenses	$660,000
Income from operations	$270,000

Answer 4 :    

Compute the income from operations for sales volume of 14,000 units

Particulars	Amount
Sales (14,000 *$212)	$2,968,000
Less: Variable expenses (14,000 * $119)	$1,666,000
Contribution margin	$1,302,000
Less: Fixed expenses	$660,000
Income from operations	$642,000