empo Company's fixed budget (based on sales of 16,000 units) for the first quarter reveals the following. Fixed BudgetSales (16,000 units × $202 per unit) $3,232,000 Cost of goods sold Direct materials $400,000 Direct labor 704,000 Production supplies 416,000 Plant manager salary 200,000 1,720,000 Gross profit 1,512,000 Selling expenses Sales commissions 128,000 Packaging 240,000 Advertising 100,000 468,000 Administrative expenses Administrative salaries 250,000 Depreciation—office equip. 220,000 Insurance 190,000 Office rent 200,000 860,000 Income from operations $184,000 1.Compute the total variable cost per unit.2. Compute the total fixed costs.3.Compute the income from operations for sales volume of 14,000 units.4.

Variable cost It refers to the cost that changes based on the output produced. It can include raw…

Answered: empo Company's fixed budget (based on…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 5P

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empo Company's fixed budget (based on sales of 16,000 units) for the first quarter reveals the following.

	Fixed Budget
Sales (16,000 units × $202 per unit)				$	3,232,000
Cost of goods sold
Direct materials		$	400,000
Direct labor			704,000
Production supplies			416,000
Plant manager salary			200,000		1,720,000
Gross profit					1,512,000
Selling expenses
Sales commissions			128,000
Packaging			240,000
Advertising			100,000		468,000
Administrative expenses
Administrative salaries			250,000
Depreciation—office equip.			220,000
Insurance			190,000
Office rent			200,000		860,000
Income from operations				$	184,000

1.Compute the total variable cost per unit.

2. Compute the total fixed costs.

3.Compute the income from operations for sales volume of 14,000 units.

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Compute the income from operations for sales volume of 18,000 units

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