Question

Please explain how you did each step.

Exercise 14-9 As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Bridgeport Company for the month of October Bridgeport Company Clothing Department Budget Report For the Month Ended October 31, 2017 Difference Favorable Unfavorable Neither Favorable Budget Actual nor Unfavorable Sales in units 7,800 11,000 3,200 Favorable Variable expenses Sales commissions $1,716 $2,640 $924 Unfavorable Advertising expense 780 1,100 320 Unfavorable Travel expense 3,744 4,950 1,206 Unfavorable Free samples given out 1,482 1,210 272 Favorable Total variable 7,722 9,900 2,178 Unfavorable Fixed expenses Rent 1,700 1,700 -0- Neither Favorable nor Unfavorable Sales salaries 1,400 1,400 -O- Neither Favorable nor Unfavorable Office salaries 900 900 -0- Neither Favorable nor Unfavorable Depreciation-autos (sales staff) 600 600 -0- Neither Favorable nor Unfavorable Total fixed 4,600 4,600 -0- Neither Favorable nor Unfavorable Total expenses $12,322 $14,500 $2,178 Unfavorable 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. Prepare a budget report based on flexible budget data to help Joe. (List variable costs before fixed costs.)

Answer 1

							difference
					Budget	actual
Sales in units				per unit	11,000	11,000
Variable expenses
sales commission		1716/7800		0.22	2420	2,640	220	U
advertising expense		780/7800		0.1	1100	1100	0	N
travel expense		3744/7800		0.48	5280	4,950	330	F
free samples given		1482/7800		0.19	2090	1,210	880	F
total variable				0.99	10890	9,900	990	F
Fixed expenses
Rent					1,700	1,700	0	N
sales salaries					1,400	1,400	0	N
office salaries					900	900	0	N
Depreciation					600	600	0	N
total fixed					4,600	4,600	0	N
total expenses					15,490	14,500	990	F
		Budget = variable cost per unit*10000 units