Problem: As a sales manager, Shawn Keyser was given the following static budget report for selling expenses in the clothing department of Dunham Company for the month October.
As a result of this budget report, Shawn was called in the President's office and congratulated on his fine sales performance. He was reprimanded, however, for allowing his cost for getting out of control. Shawn 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.
A. Prepare a budget report based on a flexible data to help Shawn.
B. Should Shawn have been reprimanded? Explain.
| |
Budget |
Actual |
|
Favorable F UnFavorable U |
| Sales Unit |
8000 |
10000 |
|
2000F |
| Variable Expenses |
|
|
|
|
| Sales Commission |
2000 |
2600 |
|
600 U |
| Advertising Expense |
800 |
850 |
|
50 U |
| Travel Expense |
4400 |
4900 |
|
500 U |
| Free Samples Given out |
1600 |
1300 |
|
300 F |
| Total Variable |
8800 |
9650 |
|
850 U |
| Fixed Expenses |
|
|
|
|
| Rent |
1500 |
1500 |
|
0 |
| Sales Salries |
1200 |
1200 |
|
0 |
| Office Salaries |
800 |
800 |
|
0 |
| Depreciation-auto |
500 |
500 |
|
0 |
| Total Fixed |
4000 |
4000 |
|
0 |
|
|
|
|
|
| Total Expenses |
12800 |
13650 |
|
850 U |