Question 1 As sales manager, Joe Batista was given the following static budget r

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Question 1 As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Sona Company for the month of October. SORTA COMPANY Budget Report For the Month Ended October 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual 8,100 9,000 900 Favorable Sales in units variable expenses Sales commissions Advertising expense Travel expense Free samples given out $1,620 $2,250 5630 Unfavorable 810 720 90 Favorable 3,888 3,600 288 Favorable 1,782 990 792 Favorable Total variable ,100 7,550 S40 Favorable Flxed expenses 1,500 1,500-0- Nelther Favorable nor Unfavorable 1,300 1,300-0- Neither Favorable nor Unfavorable 600 600 0-Neither Favorable nor Unfavorable Depreciation autos (sales staf) 500 500 0-Neither Favorable nor Unfavorable 3,900 3,900-0- Nelther Favorable nor Unfavorable Sales salaries Office salaries Total fixed Total expenses $12,000 $11,460 5540 Favorable As a result of this budget report, Joe was called into the president's office and congratulated cn his fine sales performance, He wes reprimanded, however, for allowing his costs to get out of control. Jce knew something was wrong with the perfonmance report that he had been given. Howee he was not sure what to do, and comes to you for advice.

Explanation / Answer

difference Budget actual Sales in units per unit 9,000 9,000 Variable expenses sales commission (1620/8100) 0.2 1800 2,250 450 U advertising expense (810/8100) 0.1 900 720 180 F travel expense (3888/8100) 0.48 4320 3,600 720 F free samples given (1782/8100) 0.22 1980 990 990 F total variable 1 9000 7,560 1,440 F Fixed expenses Rent 1,500 1,500 0 N sales salaries 1,300 1,300 0 N office salaries 600 600 0 N Depreciation 500 500 0 N total fixed 3,900 3,900 0 N total expenses 12,900 11,460 1,440 F Budget = variable cost per unit*10000 units

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