Question: As 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
|
|
|
|
|
|
Difference
|
|
Budget
|
|
Actual
|
|
Favorable/Unfavorable
Neither Favorable nor Unfavorable
|
| Sales in units |
8,200
|
|
11,000
|
|
2,800
|
Favorable |
| Variable expenses |
|
|
|
|
|
|
| Sales commissions |
$1,804
|
|
$2,750
|
|
$946
|
Unfavorable |
| Advertising expense |
820
|
|
990
|
|
170
|
Unfavorable |
| Travel expense |
3,772
|
|
4,950
|
|
1,178
|
Unfavorable |
| Free samples given out |
1,968
|
|
1,320
|
|
648
|
Favorable |
| Total variable |
8,364
|
|
10,010
|
|
1,646
|
Unfavorable |
| Fixed expenses |
|
|
|
|
|
|
| Rent |
1,300
|
|
1,300
|
|
-0-
|
Neither Favorable nor Unfavorable |
| Sales salaries |
1,300
|
|
1,300
|
|
-0-
|
Neither Favorable nor Unfavorable |
| Office salaries |
800
|
|
800
|
|
-0-
|
Neither Favorable nor Unfavorable |
| Depreciation-autos (sales staff) |
400
|
|
400
|
|
-0-
|
Neither Favorable nor Unfavorable |
| Total fixed |
3,800
|
|
3,800
|
|
-0-
|
Neither Favorable nor Unfavorable |
| Total expenses |
$12,164
|
|
$13,810
|
|
$1,646
|
Unfavorable |
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.
Prepare a budget report based on flexible budget data to help Joe. (List variable costs before fixed costs. Do not leave any answer field blank. Enter 0 for amounts.)