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)						$	2,940,000
Cost of goods sold
Direct materials		$	336,000
Direct labor			588,000
Production supplies			378,000
Plant manager salary			136,000				1,438,000
Gross profit							1,502,000
Selling expenses
Sales commissions			112,000
Packaging			196,000
Advertising			100,000				408,000
Administrative expenses
Administrative salaries			186,000
Depreciation—office equip.			156,000
Insurance			126,000
Office rent			136,000				604,000
Income from operations						$	490,000

Complete the following flexible budgets for sales volumes of 12,000, 14,000, and 16,000 units

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

Answer 1

Budget:

Number of units = 14,000

Sales = $2,940,000
Selling Price per unit = $2,940,000 / 14,000
Selling Price per unit = $210.00

Direct Materials = $336,000
Direct Materials per unit = $366,000 / 14,000
Direct Materials per unit = $24.00

Direct Labor = $588,000
Direct Labor per unit = $588,000 / 14,000
Direct Labor per unit = $42.00

Production Supplies = $378,000
Production Supplies per unit = $378,000 / 14,000
Production Supplies per unit = $27.00

Sales Commission = $112,000
Sales Commission per unit = $112,000 / 14,000
Sales Commission per unit = $8.00

Packaging = $196,000
Packaging per unit = $196,000 / 14,000
Packaging per unit = $14.00