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. SORIA COMPANY Clothing Department Budget Report For the Month Ended October 31, 2014 Difference Favorable (F) Unfavorable (U) Neither favorable nor unfavorable Budget Actual Sales in units 8,100 10,800 2,700 F Variable expenses Sales commissions Advertising expense Travel expense Free samples given out $2,025 $3,024 972 864 3,402 3,996 1,458 1,404 7,857 9,288 $999 U 108 F 594 U 54 F 1,431 U Total variable Fixed expenses Rent Sales salaries Office salaries Depreciation-autos (sales 1,000 1,000 1,200 1,200 800 600 800 600 staff) Total fixed 3,600 3,600 Total expenses $11,457 $11888 = $1,431 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 aiven. However. he was not sure what to do, and comes to vou for advice

Explanation / Answer

Flexible Budget Budget Actual Differene Sales in Units 8100 10800 2700 Variable Expenses sales Commission 2025 3024 999 U Advertising 972 864 108 F Travel 3402 3996 594 U Free Samples 1458 1404 54 F Total Variable Expenses 7857 9288 1431 U Fixed Expenses Rent 1000 1000 0 N Sales Salaries 1200 1200 0 N Office Salaries 800 800 0 N Depreciation 600 600 0 N Total Fixed 3600 3600 0 N Total 11457 12888 1431 U

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