Question

prepare a flexible budget at activity levels of 10,000 units and 14,000 units.

tempo company
flexible budget
flexible budget for:
item
variable amount per unit
total fixed cost
units sales of 10,000
unit sales of 14,000
sales
$ 207.00
$ 2,070,000
$ 2,898,000
variable costs
direct materials
23.00
230,000
322,000
direct labor
44.00
440,000
616,000
indirect materials
28.00
280,000
392,000
sales commissions
8.00
80,000
112,000
shipping
15.00
150,000
210,000
total variable costs
118.00
1,180,000
1,652,000
fixed costs
supervisor salary
76,000
76,000
76,000
administration salaries
126,000
126,000
126,000
building rent
96,000
96,000
96,000
insurance
66,000
66,000
66,000
office rent
76,000
76,000
76,000
total fixed costs
$ 440,000
$ 440,000
$ 440,000
income
$ 450,000
$ 806,000

Explanation:

Calculate operating income for 10,000 units

$$
LATEXBLOCK0
$$

Calculate operating income for 14,000 units

$$
LATEXBLOCK1
$$

Answer:

The budgeted operating income is:

• For 10,000 units: \(\$450,000\)
• For 14,000 units: \(\$806,000\)