Exercise 8-2 Preparing flexible budgets LO P1 Tempo Company\'s fixed budget (bas

Question

Exercise 8-2 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 (16,800 units) Cost of goods sold 53,344,000 Direct materials Direct labor Production supplies Plant manager salary 5 384,900 Book Hint Ask Print orences 688,889 416,803 184,8091,672,800 1,672,80e Gross profit Selling expenses Sales commissions Packaginge Advertising 112,908 256,008 20,038 389 8468,80 Administrat ive expenses Administrative salaries Depreciation-office equlo insurance Office rent 734, 832 244,880 174 aee sd Incone from operations Complete the folliowing flexible bueges orisales vols mes l 4/000 16000 and 18000 units (Round cost per unit to 2 decimal pleces.) sales vol mes 4000 15000 and 18000 ns Round cost per unit to 2

Explanation / Answer

Flexible Budgets :-

Particulars Variable Amt. Per Unit Total Fixed 14000 Units 16000 Units 18000 Units Sales(Unit*$209) $209 $2926000 $3344000 $3762000 Less : Variable Costs Direct Materiales $24 336000 384000 432000 Direct Labor $43 602000 688000 774000 Production Supplies $26 364000 416000 468000 Sales Commissions $7 98000 112000 126000 Packaging $16 224000 256000 288000 Total Variable Costs $116 1624000 1856000 2088000 Contribution Margin $93 1302000 1488000 1674000 Less : Fixed Costs Plant manager Salary $184000 $184000 $184000 $184000 Advertising $100000 $100000 $100000 $100000 Admini. Salaries $234000 $234000 $234000 $234000 Dep.- Office Equip. $204000 $204000 $204000 $204000 Insurance $174000 $174000 $174000 $174000 Office rent $184000 $184000 $184000 $184000 Total Fixed Costs $1080000 $1080000 $1080000 $1080000 Income from Operations $222000 $408000 $594000

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