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exercise 21-2 Tempo Company’s fixed budget (based on sales of 7,000 units)
lempo Company’s fixed badget (hased on sales of 7,000 units) for the first quarter of calendar year 2bis of fiaxible reveals the following Prepare flexible boxdgets following the format of Exhabit 21.3 than show vanisble cos and three different flexible budgets for sales volumes of 6000, 7.000 nd 800 urit. per unit, fived costs, Fixed Budget Sales 000 units Cost of goods sold Diroet marerials Direct labor Produczion supplies .. $280,000 490,000 175.000 65,001010 00 Present letter o a. Fix b. Sta Gross profit Seling expenses 1.790000 Sales commissions Pacizging Advertsing 54.00 125000 419,000 Adminstrative experses 85,000 Administrative salarits Depreciation-oice equp 20000 36 000 17%000 51.195.000 9. Co h. Fle Office rent (x, 6.000 i. Va Solitaire Company’s fixed budget performance repon for Juce folk include $294.000 variable expenses and $21,000 lixed expenses. A 15,000 badgeted expenses s include S27,000 fied exc lritl
Expert Answer
| TEMPO COMPANY | |||||
| Flexible Budgets | |||||
| For Quarter Ended March 31, 2015 | |||||
| ——Flexible Budget—— | ——Flexible Budget at —— | ||||
| Variable Amount per Unit | Total Fixed Cost | 6,000 units | 7,000 units | 8,000 units | |
| Sales | 400 | 2400000 | 2800000 | 3200000 | |
| Variable costs: | |||||
| Direct materials | 40 | 240000 | 280000 | 320000 | |
| Direct labor | 70 | 420000 | 490000 | 560000 | |
| Production supplies | 25 | 150000 | 175000 | 200000 | |
| Sales commissions | 20 | 120000 | 140000 | 160000 | |
| Packaging | 22 | 132000 | 154000 | 176000 | |
| Total variable costs | 177 | 1062000 | 1239000 | 1416000 | |
| Contribution margin | 223 | 13,38,000 | 15,61,000 | 17,84,000 | |
| Fixed costs: | |||||
| Plant manager salary | 65,000 | 65,000 | 65,000 | 65,000 | |
| Advertising | 1,25,000 | 1,25,000 | 1,25,000 | 1,25,000 | |
| Administrative salaries | 85,000 | 85,000 | 85,000 | 85,000 | |
| Depreciation—office equip. | 35,000 | 35,000 | 35,000 | 35,000 | |
| Insurance | 20,000 | 20,000 | 20,000 | 20,000 | |
| Office rent | 36,000 | 36,000 | 36,000 | 36,000 | |
| Total fixed costs | 366000 | 366000 | 366000 | 366000 | |
| Income from operations | 9,72,000 | 11,95,000 | 14,18,000 | ||
