Tempo Company's fixed budget (based on sales of 18,000 units) folllows.
Fixed Budget
Sales (18,000 units x $219 per unit) 3,942,000
Costs
Direct materials 450,000
Direct labor 792,000
Indirect materials 486,000
Supervisor salary 250,000
Sales commissions 144,000
Shipping 270,000
Administrative salaries 300,000
Depreciation-Office equipment 270,000
Insurance 240,000
Office rent 250,000
Income 490,000
1. Compute total variable cost per unit.
2. Compute total fixed costs.
3. Prepare a flexible budget at activity levels of 16,000 units and 20,000 units.