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, 2020 Difference Favorable Unfavorable Neither Favorable Budget Actual nor Unfavorable Sales in units 7,500 11,000 3,500 Favorable Variable expenses Sales commissions $1,800 $3,080 $1,280 Unfavorable Advertising expense 1,050 990 60 Favorable Travel expense 3,300 4,950 1,650 Unfavorable Free samples given out 1,275 1,540 265 Unfavorable Total variable 7,425 10,560 3,135 Unfavorable Fixed expenses Rent 1,600 1,600 -0-Neither Favorable nor Unfavorable Sales salaries 1,100 1,100 -0-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 4,200 4,200 -0-Neither Favorable nor Unfavorable Total expenses $11,625 $14,760 $3,135 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.) SORIA COMPANY Selling Expense Flexible Budget Report Clothing Department For the Month Ended October 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable

Answer 1

SORIA COMPANY 16 17 Selling Expense Flexible Budget Report For the Month Ended October 31, 2017 18 Budgeted Actual Favourable / Unfavourable 19 Sales in units 20 11000 11000 Variable Expenses; 21 Sales Commissions @ 11000*1800/7500 22 3,080 440 (UF) 550 (F) 2,640 Advertising @ 1050/7500 *11000 Travel expense @3300/7500 * 11000 Free Samples @ 1275/7500*11000 Total Variable Expenses Fixed Expenses ; 23 1,540 990 110 (UF) 24 4,840 4,950 25 330 (F) 1,870 1,540 26 330 (F) 10,890 10,560 27 Rent Neither Favorable nor unfavorable 28 1,600 1,600 Sales Salaries 29 Neither Favorable nor unfavorable 1,100 1,100 Office Salaries Neither Favorable nor unfavorable 30 900 900 Depreciation Total Fixed Expenses Total Expenses Neither Favorable nor unfavorable 31 600 600 32 4,200 4,200 330 (F) 33 15,090 14,760 34