Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following. Sales (14,000 units × $215 per unit) $3,010,000 Cost of goods sold Direct materials $322,000 Direct labor 588,000 Production supplies 392,000 Plant manager salary 122,000 1,424,000 Gross profit 1,586,000 Selling expenses Sales commissions 112,000 Packaging 224,000 Advertising 100,000 436,000 Administrative expenses Administrative salaries 172,000 Depreciation—office equip. 142,000 Insurance 112,000 Office rent 122,000 548,000 Income from operations $602,000 Total variable cost per unit = 117Total fixed cost per unit = 770,000Questions:Compute the income from operations for sales volume of 12,000 units.Compute the income from operations for sales volume of 16,000 units.

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Answered: Tempo Company's fixed budget (based on…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 5P

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Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following.


Sales (14,000 units × $215 per unit)			$	3,010,000
Cost of goods sold
Direct materials	$	322,000
Direct labor		588,000
Production supplies		392,000
Plant manager salary		122,000		1,424,000
Gross profit				1,586,000
Selling expenses
Sales commissions		112,000
Packaging		224,000
Advertising		100,000		436,000
Administrative expenses
Administrative salaries		172,000
Depreciation—office equip.		142,000
Insurance		112,000
Office rent		122,000		548,000
Income from operations			$	602,000

Total variable cost per unit = 117

Total fixed cost per unit = 770,000

Questions:

Compute the income from operations for sales volume of 12,000 units.
Compute the income from operations for sales volume of 16,000 units.

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