As sales manager, Joe Batista was given the following static budget report for s
ID: 2449444 • Letter: A
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 Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Sales in units 7,500 11,000 3,500 Favorable Variable expenses Sales commissions Advertising expense Travel expense Free samples given out $1,950 $3,080 $1,130 Unfavorable 990 165 Unfavorable 3,300 3,850 550 Unfavorable 825 1,6501,210 440 Favorable Total variable 7,725 9,130 1,405 Unfavorable Fixed expenses Rent Sales salaries Office salaries 1,7001,700 -0- Neither Favorable nor Unfavorable 1,1001,100 -0- Neither Favorable nor Unfavorable 800 -0- Neither Favorable nor Unfavorable Depreciation-autos (sales staff) 600 6000 Neither Favorable nor Unfavorable 4,200 4,200 -0- Neither Favorable nor Unfavorable 800 Total fixed Total expenses $11,925 $13,330 $1,405 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.)Explanation / Answer
Flexible Budget Report:
Flexible budget
Actual
Variance
Amount
Type
Sales in units
$ 11,000
$ 11,000
Variable expenses :
Sales Commission
$ 2,860
$ 3,080
$ 220
Unfavorable
(1950/7500)*11000
Advertising Expense
$ 1,210
$ 990
$ 220
Favorable
(825/7500)*11000
Travel Expense
$ 4,840
$ 3,850
$ 990
Favorable
(3300/7500)*11000
Free Samples Given out
$ 2,420
$ 1,210
$ 1,210
Favorable
(1650/7500)*11000
Total Variable
$ 11,330
$ 9,130
$ 2,200
Favorable
Fixed Expense :
Rent
$ 1,700
$ 1,700
$ -
Neither Favorable nor Unfavorable
Sales Salaries
$ 1,100
$ 1,100
$ -
Neither Favorable nor Unfavorable
Office Salaries
$ 800
$ 800
$ -
Neither Favorable nor Unfavorable
Depreciation
$ 600
$ 600
$ -
Neither Favorable nor Unfavorable
Total Fixed
$ 4,200
$ 4,200
$ -
Neither Favorable nor Unfavorable
Total Expense
$ 15,530
$ 13,330
$ 2,200
Favorable
Flexible Budget Report:
Flexible budget
Actual
Variance
Amount
Type
Sales in units
$ 11,000
$ 11,000
Variable expenses :
Sales Commission
$ 2,860
$ 3,080
$ 220
Unfavorable
(1950/7500)*11000
Advertising Expense
$ 1,210
$ 990
$ 220
Favorable
(825/7500)*11000
Travel Expense
$ 4,840
$ 3,850
$ 990
Favorable
(3300/7500)*11000
Free Samples Given out
$ 2,420
$ 1,210
$ 1,210
Favorable
(1650/7500)*11000
Total Variable
$ 11,330
$ 9,130
$ 2,200
Favorable
Fixed Expense :
Rent
$ 1,700
$ 1,700
$ -
Neither Favorable nor Unfavorable
Sales Salaries
$ 1,100
$ 1,100
$ -
Neither Favorable nor Unfavorable
Office Salaries
$ 800
$ 800
$ -
Neither Favorable nor Unfavorable
Depreciation
$ 600
$ 600
$ -
Neither Favorable nor Unfavorable
Total Fixed
$ 4,200
$ 4,200
$ -
Neither Favorable nor Unfavorable
Total Expense
$ 15,530
$ 13,330
$ 2,200
Favorable
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