Exercise 10-9 SORIA COMPANY Clothing Department Budget Report For the Month Ende

Question

Exercise 10-9

SORIA COMPANY
Clothing Department
Budget Report
For the Month Ended October 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

8,400

9,000

600

$2,352

$2,160

$192

1,008

720

288

3,696

3,600

96

1,512

1,080

432

8,568

7,560

1,008

1,100

1,100

–0–

1,200

1,200

–0–

700

700

–0–

400

400

–0–

3,400

3,400

–0–

$11,968

$10,960

$1,008

SORIA COMPANY
Selling Expense Flexible Budget Report
Clothing Department
For the Month Ended October 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

LINK TO TEXT

LINK TO TEXT

Exercise 10-9

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

8,400

9,000

600

Favorable Variable expenses     Sales commissions

$2,352

$2,160

$192

Favorable     Advertising expense

1,008

720

288

Favorable     Travel expense

3,696

3,600

96

Favorable     Free samples given out

1,512

1,080

432

Favorable        Total variable

8,568

7,560

1,008

Favorable Fixed expenses      Rent

1,100

1,100

–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)

400

400

–0–

Neither Favorable nor Unfavorable        Total fixed

3,400

3,400

–0–

Neither Favorable nor Unfavorable Total expenses

$11,968

$10,960

$1,008

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. (List variable costs before fixed costs. Do not leave any answer field blank. Enter 0 for amounts.)

SORIA COMPANY
Selling Expense Flexible Budget Report
Clothing Department
For the Month Ended October 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

RentSales CommissionsSales in UnitsTravel ExpenseFree SamplesSales SalariesOffice SalariesTotal CostsTotal Fixed CostsTotal Variable CostsFixed CostsVariable CostsAdvertising ExpenseDepreciation—Sale Staff Autos

Depreciation—Sale Staff AutosFree SamplesTotal Variable CostsTravel ExpenseSales SalariesOffice SalariesAdvertising ExpenseFixed CostsRentSales CommissionsSales in UnitsTotal CostsTotal Fixed CostsVariable Costs

Fixed CostsTravel ExpenseFree SamplesSales SalariesOffice SalariesTotal CostsVariable CostsSales CommissionsRentAdvertising ExpenseSales in UnitsDepreciation—Sale Staff AutosTotal Variable CostsTotal Fixed Costs

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

Advertising ExpenseDepreciation—Sale Staff AutosTotal Variable CostsOffice SalariesRentTravel ExpenseSales CommissionsFixed CostsVariable CostsFree SamplesSales in UnitsSales SalariesTotal CostsTotal Fixed Costs

Neither Favorable nor UnfavorableFavorableUnfavorable

Sales CommissionsOffice SalariesFree SamplesRentSales in UnitsAdvertising ExpenseDepreciation—Sale Staff AutosSales SalariesTravel ExpenseFixed CostsTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs

Neither Favorable nor UnfavorableFavorableUnfavorable

Fixed CostsFree SamplesDepreciation—Sale Staff AutosSales SalariesSales CommissionsVariable CostsTotal CostsOffice SalariesSales in UnitsRentTotal Variable CostsTravel ExpenseTotal Fixed CostsAdvertising Expense

FavorableNeither Favorable nor UnfavorableUnfavorable

Variable CostsTotal Variable CostsTotal Fixed CostsFree SamplesTravel ExpenseAdvertising ExpenseOffice SalariesRentDepreciation—Sale Staff AutosFixed CostsSales SalariesTotal CostsSales CommissionsSales in Units

UnfavorableNeither Favorable nor UnfavorableFavorable

Sales SalariesFixed CostsAdvertising ExpenseTravel ExpenseVariable CostsDepreciation—Sale Staff AutosSales in UnitsFree SamplesTotal Fixed CostsOffice SalariesRentSales CommissionsTotal CostsTotal Variable Costs

Advertising ExpenseSales in UnitsVariable CostsTotal Variable CostsSales CommissionsSales SalariesOffice SalariesTotal CostsDepreciation—Sale Staff AutosFree SamplesRentFixed CostsTotal Fixed CostsTravel Expense

UnfavorableFavorableNeither Favorable nor Unfavorable

Advertising ExpenseOffice SalariesVariable CostsDepreciation—Sale Staff AutosFixed CostsSales in UnitsSales CommissionsTotal Fixed CostsTotal Variable CostsTravel ExpenseTotal CostsFree SamplesRentSales Salaries

Neither Favorable nor UnfavorableUnfavorableFavorable

Variable CostsOffice SalariesSales in UnitsTotal CostsSales SalariesFree SamplesRentAdvertising ExpenseDepreciation—Sale Staff AutosSales CommissionsTotal Fixed CostsFixed CostsTotal Variable CostsTravel Expense

FavorableUnfavorableNeither Favorable nor Unfavorable

Sales SalariesSales CommissionsDepreciation—Sale Staff AutosFree SamplesOffice SalariesAdvertising ExpenseSales in UnitsFixed CostsTotal CostsTotal Fixed CostsTotal Variable CostsTravel ExpenseVariable CostsRent

UnfavorableNeither Favorable nor UnfavorableFavorable

Sales in UnitsOffice SalariesSales SalariesRentTotal Fixed CostsTravel ExpenseFixed CostsTotal CostsDepreciation—Sale Staff AutosTotal Variable CostsVariable CostsFree SamplesSales CommissionsAdvertising Expense

FavorableNeither Favorable nor UnfavorableUnfavorable

Total Variable CostsFixed CostsTotal CostsTotal Fixed CostsFree SamplesOffice SalariesVariable CostsAdvertising ExpenseTravel ExpenseRentSales in UnitsSales CommissionsSales SalariesDepreciation—Sale Staff Autos

$

$

$

UnfavorableFavorableNeither Favorable nor Unfavorable

LINK TO TEXT

LINK TO TEXT

Explanation / Answer

Solution:

Soria Company Selling Expenses Flexible Budget Report Clothing Department For the month ended October 31, 2017 Particulars Budget Actual Favorable, Unfavorable, Neither favorable nor unfavorable Sales in units 9000 9000 Variable Expenses Sales Commissions $2,520.00 $2,160.00 Favorable Advertising expenses $1,080.00 $720.00 Favorable Travel expense $3,960.00 $3,600.00 Favorable Free sample given out $1,620.00 $1,080.00 Favorable Total variable Expenses $9,180.00 $7,560.00 Favorable Fixed Expenses Rent $1,100.00 $1,100.00 Neither Favorable nor Unfavorable Sales Salaries $1,200.00 $1,200.00 Neither Favorable nor Unfavorable Office salaries $700.00 $700.00 Neither Favorable nor Unfavorable Depreciation - Autos $400.00 $400.00 Neither Favorable nor Unfavorable Total Fixed Expenses $3,400.00 $3,400.00 Neither Favorable nor Unfavorable Total Expenses $12,580.00 $10,960.00 Favorable

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