Tempo Company's fixed budget (based on sales of 16,000 units) follows:
Fixed Budget
Sales (16,000 units × $203 per unit) 3,248,000
Costs
Direct materials 384,000
Direct labor 672,000
Indirect materials 432,000
Supervisor salary 184,000
Sales commissions 128,000
Shipping 240,000
Administrative salaries 234,000
Depreciation—Office equipment 204,000
Insurance 174,000
Office rent 184,000
Income 412,000
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.
