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Flexible budgets by identifying variable and fixed components

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Tempo Company's fixed budget for the first quarter of year 2016 reveals the following. Prepare flexible budgets that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 6,000, 7,000, and 8,000 units

Sales (7,000 units) $2,800.000
Cost of goods sold:
Direct materials $280,000
Direct labor $490,000
Production supplies $175,000
Plant manager salary $65,000
Total $1,010,000
Gross profit $1,790,000
Selling expenses:
Sales commission $140,000
Packaging $154,000
Advertising $125,000
Total $419,000
Administrative expenses:
Administrative salaries $85,000
Depreciation - office equipment $35,000
Insurance $20,000
Office rent $36,000
Total $176,000
Income from operations $1,195,000

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Solution Summary

Tempo Company
Flexible Budgets

Particulars Flexible Budget Flexible Budget for unit sales of 6,000 units Flexible Budget for unit sales of 7,000 units Flexible Budget for unit sales of 8,000 units
Variable cost per unit Total fixed cost

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Tempo Company
Flexible Budgets

Particulars Flexible Budget Flexible Budget for unit sales of 6,000 units Flexible Budget for unit sales of 7,000 units Flexible Budget for unit sales of 8,000 units
Variable cost per unit Total fixed cost
Sales $400.00 $2,400,000 $2,800,000 ...

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