Question

Sandy Simon, the manager of the Clothing Dept., received this budget report for She has a meeting tomorrow with the Division manager to discuss it (he already! 1. Prepare a flexible budget report with activity and spending variances for Sandy use to explain the reasons for the variances. 2. Prepare a list of "bullet points for Sandy to use to discuss this with her manage DELCO COMPANY CLOTHING DEPARTMENT BUDGET REPORT MONTH ENDED OCTOBER 31, 2015 DIFFERENCE BUDGET ACTUAL FAVOR (UNFAV) Sales in Units 8,000 10,000 2,000 Variable Expenses Sales Commissions S 2,400 $ 2.600 S (200) Advertising Expense 720 850 (130) Travel Expense 3,600 4,100 (500) Free Samples Given Out 1,600 1,400 200 TOTAL VARIABLE 8,320 8,950 (530) Fixed Expenses Rent 1,500 1,500 Sales Salaries 1,200 1,400 200) Office Salaries 800 800 Depreciation - Autos 500 500 TOTAL FIXED 4,000 4,200 TOTAL EXPENSES S 12.320 S 13,150 S (830) (200)

Answer 1

Answer is given below

Department has done well on variable cost

Only office salaries in fixed cost is higher than budget

DELCO COMPANY CLOTHING DEPARTMENT BUDGET REPORT MONTH ENDED OCTOBER 31, 2015 Actual Spending Flexible Variance Budget 10,000 10,000 Activity Variance Results Planning Budget 8,000 Sales units Variable cost Cost Sales Commission Advertising expenses Travel Expense Free sample given out TOTAL VARIABLE Fixed expense Rent Sales salaries Office salaries Depreciation - Autos TOTAL FIXED TOTAL EXPENSES $2,600 $850 $4,100 $1,400 $8,950 $400 F $50 F $400 F $600 F $1,450 F $3,000 $900 $4,500 $2,000 $10,400 $600 U $180 $900 U $400U $2,080 U $2,400 $720 $3,600 $1,600 $8,320 $200 u $1,500 $1,400 $800 $500 $4,200 $13,150 $1,500 $1,200 $800 $500 $4,000 $14,400 $1,500 $1,200 $800 $500 $4,000 $12,320 $200 $1,250 F $0 0 $2,080 U Bullet points All variable costs savings - good performance Fixed cost - Sales salaries is adverse. Reasons for the same to be discussed Overall variance - favourable