Question

As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Vaughn Company for the month of October.

VAUGHN COMPANY Clothing Department Budget Report For the Month Ended October 31, 2020
					Difference
	Budget		Actual		Favorable Unfavorable Neither Favorable nor Unfavorable
Sales in units	7,500		10,000		2,500	Favorable
Variable expenses
Sales commissions	$1,950		$2,500		$550	Unfavorable
Advertising expense	1,050		900		150	Favorable
Travel expense	3,000		4,500		1,500	Unfavorable
Free samples given out	1,125		1,100		25	Favorable
Total variable	7,125		9,000		1,875	Unfavorable
Fixed expenses
Rent	1,800		1,800		–0–	Neither Favorable nor Unfavorable
Sales salaries	1,200		1,200		–0–	Neither Favorable nor Unfavorable
Office salaries	700		700		–0–	Neither Favorable nor Unfavorable
Depreciation—autos (sales staff)	600		600		–0–	Neither Favorable nor Unfavorable
Total fixed	4,300		4,300		–0–	Neither Favorable nor Unfavorable
Total expenses	$11,425		$13,300		$1,875	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

Answer 1