IE Exercise 23-3 (Static): Preparing flexible budgets LO P1

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

Fixed Budget
Sales (7,000 units $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
DepreciationOffice 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.