Problem - As a sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Soria Company for the month of October
|
SORIA COMPANY Clothing Department Budget Report For the Month Ended October 31, 2017
|
|
|
Budget
|
Actual
|
Difference- Favorable, Unfavorable, Neither Favorable and nor unfavorable
|
|
Sales in units
|
8,100
|
9,000
|
900 Favorable
|
|
Variable expenses
|
|
|
|
|
Sales commissions
|
$1,620
|
$2,250
|
$630 Unfavorable
|
|
Advertising expense
|
810
|
720
|
90 Favorable
|
|
Travel expense
|
3,888
|
3,600
|
288 Favorable
|
|
Free samples given out
|
1,782
|
990
|
792 Favorable
|
|
Total variable
|
8,100
|
7,560
|
540 Favorable
|
|
Fixed expenses
|
|
|
|
|
Rent
|
1,500
|
1,500
|
-0- Neither Favorable nor Unfavorable
|
|
Sales salaries
|
1,300
|
1,300
|
-0- Neither Favorable nor Unfavorable
|
|
Office salaries
|
600
|
600
|
-0- Neither Favorable nor Unfavorable
|
|
Depreciation-autos (sales staff)
|
500
|
500
|
-0- Neither Favorable nor Unfavorable
|
|
Total fixed
|
3,900
|
3,900
|
-0- Neither Favorable nor Unfavorable
|
|
Total expenses
|
$12,000
|
$11,460
|
$540 Favorable
|
As a result of this budget report, Joe was called into the president's office and congratulated on his fine sales performance. He was reprimanded, however, for allowing his costs to get out of control. Joe knew something was wrong with the performance report that he had been given. However, he was not sure what to do, and comes to you for advice.
Required - Prepare a budget report based on flexible budget data to help Joe.