Exercise $21-3($Static$)$ Preparing flexible budgets LO P$1$

Tempo Company's fixed budget $($based on sales of $7,000$ units$)$ follows.

Fixed Budget

Sales $(7,000$ units $\backslash$times $$400$ per unit$)$ $ $2,800,000$

Costs

Direct materials $280,000$

Direct labor $490,000$

Indirect materials $175,000$

Supervisor salary $65,000$

Sales commissions $140,000$

Shipping $154,000$

Administrative salaries $210,000$

Depreciation$$Office equipment $35,000$

Insurance $20,000$

Office rent $36,000$

Income $1,195,000$

$1.$ Compute total variable cost per unit.

$2.$ Compute total fixed costs.

$3.$ Prepare a flexible budget at activity levels of $6,000$ units and $8,000$ units.