Preparation of flexible budgets
Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter of calendar year 2015 reveals the following.
| |
Fixed Budget |
| Sales (12,000 units) |
|
|
|
|
|
$ |
2,640,000 |
| Cost of goods sold |
|
|
|
|
|
|
|
| Direct materials |
|
$ |
288,000 |
|
|
|
|
| Direct labor |
|
|
516,000 |
|
|
|
|
| Production supplies |
|
|
312,000 |
|
|
|
|
| Plant manager salary |
|
|
88,000 |
|
|
|
1,204,000 |
| |
|
|
|
|
|
|
|
| Gross profit |
|
|
|
|
|
|
1,436,000 |
| Selling expenses |
|
|
|
|
|
|
|
| Sales commissions |
|
|
96,000 |
|
|
|
|
| Packaging |
|
|
192,000 |
|
|
|
|
| Advertising |
|
|
100,000 |
|
|
|
388,000 |
| |
|
|
|
|
|
|
|
| Administrative expenses |
|
|
|
|
|
|
|
| Administrative salaries |
|
|
138,000 |
|
|
|
|
| Depreciation-office equip. |
|
|
108,000 |
|
|
|
|
| Insurance |
|
|
78,000 |
|
|
|
|
| Office rent |
|
|
88,000 |
|
|
|
412,000 |
| |
|
|
|
|
|
|
|
| Income from operations |
|
|
|
|
|
$ |
636,000 |
| |
|
|
|
|
|
|
|
Complete the following flexible budgets for sales volumes of 10,000, 12,000, and 14,000 units.