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A company's returns department incurs annual overhead costs of $369,000 and budgets 9,000 returns per year. Management believes it has found a better way to
A company's returns department incurs annual overhead costs of $369,000 and budgets 9,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are returned due to damage by 2%. This is expected to reduce the department's annual overhead by $20,000. Compute the department's standard overhead rate per return (a) before the sustainability improvement and (b) after the sustainability improvement. (Round your answers to 2 decimal places.) Before Sustainability Improvement After Sustainability Improvement Standard overhead rate per return Tempo Company's fixed budget (based on sales of 12,000 units) folllows. 2,424,000 Fixed Budget Sales (12,000 units * $202 per unit) Costs Direct materials Direct labor Indirect materials Supervisor salary Sales commissions Shipping Administrative salaries Depreciation-office equipment Insurance Office rent Income 288,000 504,000 336,000 88,000 108,000 180,000 138,000 108,000 78,000 88,000 508,000 1. Compute total variable cost per unit. 2. Compute total fixed costs. 3. Prepare a flexible budget at activity levels of 10,000 units and 14,000 units. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute total variable cost per unit. Total variable cost per unit Complete this question by entering your answers Required 1 Required 2 Required 3 Compute total fixed costs. Total fixed costs Prepare a flexible budget at activity levels of 10,000 units and 14,000 units. TEMPO COMPANY Flexible Budget Variable Amount Total Fixed Cost Flexible Budget for: Units Sales Unit Sales of of 10,000 14,000 per Unit Variable costs Fixed costs
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