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, 2012 Difference Budget Actual Favorable F Unfavorable U Neither Favorable nor Unfavorable N Sales in units 7,500 9,800 3,500 F Variable expenses     Sales commissions $1,800 $3,080 $1,280 U     Advertising expense 1,050 990 60 F     Travel expense 3,300 4,950 1,650 U     Free samples given out 1,275 1,540 265 U        Total variable 7,425 10,560 3,135 U Fixed expenses      Rent 1,600 1,600 0 N      Sales salaries 1,100 1,100 0 N      Office salaries 900 900 0 N      Depreciation - autos (sales staff) 600 600 0 N        Total fixed 4,200 4,200 0 N Total expenses $11,344 $12,520 $3,135 U

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.)

Answer 1