As sales manager, Joe Batista was given the following static budget report for s

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.

Prepare a budget report based on flexible budget data to help Joe. (List variable costs before fixed costs.)

SORIA COMPANY Clothing Department Budget Report For the Month Ended October 31, 2014 Favorable (F) Unfavorable (U) Neither Favorable nor Unfavorable Budget Actual 8,500 10,500 2,000 F Sales in units Variable expenses Sales commissions Advertising expense Travel expense Free samples given out $2,465 $2,520 850 1,050 3,995 3,885 1,445 1,470 8,755 8,925 $55 U 200 U 110 F 25 U 170 U Total variable Fixed expenses Rent Sales salaries Office salaries Depreciation-autos (sales 1,200 1,200 1,300 1,300 800 800 600 600 staff) 3,900 3,900 $12,655 $12,825 Total fixed Total expenses $170 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

Explanation / Answer

SORIA COMPANY Selling Expenses Flexible budget report For the Month Ended October 31, 2014 Flexible Budget Actual results Revenue and spending variance Sales                      8,500                10,500                            2,000 F Variable Expenses Sales commission                      3,045                  2,520                               525 F Advertising                      1,050                  1,050                                   - N Travel exp                      4,935                  3,885                            1,050 F free samples                      1,785                  1,470                               315 F Total varaible                    10,815                  8,925                            1,890 F Fixed expenses Rent                      1,200                  1,200                                   - N Sales salaries                      1,300                  1,300                                   - N office salaries                          800                      800                                   - N Depreciation                          600                      600                                   - N Total fixed                      3,900                  3,900                                   - N Total Expenses                    14,715                12,825                            1,890 F

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