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IE Exercise 23-3 (Static): Preparing flexible budgets LO P1 Tempo Company's fixed budget (based on...

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Accounting

IE Exercise 23-3 (Static): Preparing flexible budgets LO P1

Tempo Company's fixed budget (based on sales of 7,000 units) follows.

Fixed Budget
Sales (7,000 units $400 per unit) $ 2,800,000
Costs
Direct materials 280,000
Direct labor 490,000
Indirect materials 175,000
Supervisor salary 65,000
Sales commissions 140,000
Shipping 154,000
Administrative salaries 210,000
DepreciationOffice equipment 35,000
Insurance 20,000
Office rent 36,000
Income $ 1,195,000
  1. Compute total variable cost per unit.
  2. Compute total fixed costs.
  3. Prepare a flexible budget at activity levels of 6,000 units and 8,000 units.

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