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, 2012 |
|
|
|
Difference |
|
Budget |
Actual |
Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N |
| Sales in units |
7,800 |
9,800 |
2,000 |
F |
| Variable expenses |
|
|
|
|
| sales commissions |
$1,638 |
$2,352 |
$714 |
U |
| Advertising expense |
1,092 |
1,274 |
182 |
U |
| Travel expense |
3,744 |
4,312 |
568 |
U |
| Free samples given out |
1,170 |
882 |
288 |
F |
| Total variable |
7,644 |
8,820 |
1,176 |
U |
| Fixed expenses |
|
|
|
|
| Rent |
1,200 |
1,200 |
%u20130%u2013 |
N |
| Sales salaries |
1,200 |
1,200 |
%u20130%u2013 |
N |
| Office salaries |
800 |
800 |
%u20130%u2013 |
N |
| Depreciation%u2014autos (sales staff) |
500 |
500 |
%u20130%u2013 |
N |
| Total fixed |
3,700 |
3,700 |
%u20130%u2013 |
N |
| Total expenses |
$11,344 |
$12,520 |
$1,176 |
U |
As a result of this budget report, Joe was called into the president%u2019s 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.