Question

As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Martinez Company for the month of October. Martinez Company Clothing Department Budget Report For the Month Ended October 31, 2017 Difference Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable Sales in units 7,900 9,000 1,100 Favorable Variable expenses Sales commissions $1,896 $2,430 $534 Unfavorable Advertising expense 1,106 630 476 Favorable Travel expense 3,318 3,150 168 Favorable Free samples given out 1,185 990 195 Favorable Total variable 7,505 7,200 305 Favorable Fixed expenses Rent 1,200 1,200 –0– Neither Favorable nor Unfavorable Sales salaries 1,000 1,000 –0– Neither Favorable nor Unfavorable Office salaries 700 700 –0– Neither Favorable nor Unfavorable Depreciation—autos (sales staff) 400 400 –0– Neither Favorable nor Unfavorable Total fixed 3,300 3,300 –0– Neither Favorable nor Unfavorable Total expenses $10,805 $10,500 $305 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. Prepare a budget report based on flexible budget data to help Joe.

Answer 1