Tempo Company's fixed budget (based on sales of 16,000 units) folllows.

 Exercise 8-3 (Algo) Preparing flexible budgets LO P1
Tempo Company's fixed budget (based on sales of 16,000 units) folllows.
 

Fixed Budget
Sales (16,000 units × $214 per unit)    3,424,000
Costs    
Direct materials    400,000
Direct labor    688,000
Indirect materials    432,000
Supervisor salary    200,000
Sales commissions    112,000
Shipping    240,000
Administrative salaries    250,000
Depreciation—Office equipment    220,000
Insurance    190,000
Office rent    200,000
Income    492,000
 
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.