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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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    https://brainmass.com/business/finance/flexible-budgets-identifying-variable-fixed-components-618577

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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 ...

    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

    $2.19