E5.21 (LO 1, 2, 4) Shady Lady sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year: Revenues Commercial $300,000 Residential $480,000 Direct material costs Direct labour costs Overhead costs $ 30,000 100,000 55,000 $ 70,000 300,000 Operating income (loss) 185,000 $115,000 162,000 532,000 $(52,000) The controller, Susan Chan, is concerned about the residential product line. She cannot understand why this line is not more profitable given that window coverings are less complex to install for resi- dential customers. In addition, the residential client base resides close to the company office, so travel costs are not as expensive on a per-client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Following are the three activity cost pools and related information she developed:

E5.21 (LO 1, 2, 4) Shady Lady sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year: Revenues Commercial $300,000 Residential $480,000 Direct material costs Direct labour costs Overhead costs $ 30,000 100,000 55,000 $ 70,000 300,000 Operating income (loss) 185,000 $115,000 162,000 532,000 $(52,000) The controller, Susan Chan, is concerned about the residential product line. She cannot understand why this line is not more profitable given that window coverings are less complex to install for resi- dential customers. In addition, the residential client base resides close to the company office, so travel costs are not as expensive on a per-client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Following are the three activity cost pools and related information she developed:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Tempo Company's fixed budget (based on sales of 10,000 units) folllows. Fixed Budget Sales (10,000 units x $209 per unit) Costs Direct materials Direct labor Indirect materials 2,090,000 240,000 430,000 280,000 Supervisor salary 40,000 Sales commissions 80,000 Shipping 150,000 Administrative salaries 90,000 Depreciation-office equipment 60,000 Insurance 30,000 Office rent 40,000 Income 650,000 ces 1. Compute total variable cost per unit. 2. Compute total fixed costs. 3. Prepare a flexible budget at activity levels of 8,000 units and 12,000 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a flexible budget at activity levels of 8,000 units and 12,000 units. Sales Variable costs Direct materials Direct labor Indirect materials Sales commissions Shipping TEMPO COMPANY Flexible Budget Variable Amount per Unit Total Fixed Cost $ $ 2,090,000.00 2,090,000.00 Flexible Budget for: Units Sales Unit Sales of of 8,000 12,000…
Tempo Company's fixed budget (based on sales of 16,000 units) folllows. Fixed Budget Sales (16,000 units * $218 per unit) Costs Direct materials Direct labor Indirect materials Supervisor salary Sales commissions Shipping Administrative salaries Depreciation-office equipment Insurance office rent Income 3,488,000 400,000 704,000 448,000 200,000 112 000 240 000 250,000 220,000 190,000 200,000 524,000 1. Compute total variable cost per unit. 2. Compute total fixed costs. 3. Prepare a flexible budget at activity levels of 14,000 units and 18,000 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute total variable cost per unit. Total variable cost per unit Required 1 Required 2 >