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 8,300 10,300 2,000 F Variable expenses Sales commissions Advertising expense Travel expense Free samples given out $2,241 $2,781 1,079 1,133 3,901 4,017 2,075 1,339 9,296 9,270 $540 U 54 U 116 U 736 F 26 F Total variable Fixed expenses Rent Sales salaries Office salaries Depreciation-autos (sales 1,800 1,800 1,100 1,100 800 800 600 0- N 0- N $26 F 600 staff) 4,300_4,300 $13,596 $13,570 Total fixed Total expenses 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

    Selling Expense Flexible Budget For the month ended October 31,2014 Budget Actual Favourable (F) Unfavourable(UF) Neither Favourable nor unfavourable (N) Sales in units 10300 10300 0 N Variable expenses           Sales commissions 2781 2781 0 N           Advertising expense 1339 1133 206F 206           Travel expense 4841 4017 824F 824           Free samples given out 2575 1339 1236F 1236 11536 9270 2266F 2266

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