Question

Exercise 10-9 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, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual 8,400 9,000 600 Favorable Sales in units Variable expenses $1,680 $2,430 $750 Unfavorable Sales commissions Advertising expense Travel expense Free samples given out 1,176 4,032 3,150 1,680 8,568 810 366 Favorable 882 Favorable 690 Favorable 1,188 Favorable 990 Total variable 7,380 Fixed expenses Rent Sales salaries Office salaries Depreciation-autos (sales staff) 1,800 1,800 -0- Neither Favorable nor Unfavorable 1,100 1,100 -0 Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable 500500 -0- Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable 600 600 Total fixed

Answer 1

SORIA COMPANY Selling Expense Flexible Budget Report Clothing Department For the Month Ended October 31, 2017 Variance Budget 9,000 Actual Sales in units 9,000 Variable Expenses NOTE $1,800 $1,260 $4,320 $1,800 $9,180 $2,430 $810 $630 U $450 F Sales Commissions Advertising Expense Travel Expense Free Samples Given out Total Variable Expenses In case of costs, if actual is more than budgeted, it is unfavorable; if actual is less than budgeted, it is favorable; Otherwise, no variance Here, U - Unfavorable; F - Favorable; None - Neither favorable nor Unfavorable 3,150 $1,170 F $810 F $7,380 $1,800 F $990 Fixed Expenses Flexible Budget for: $1,800 $1,100 $600 $500 $4,000 $13,180 $1,800 $1,100 $600 $500 $4,000 $11,380 Rent Sales Salaries Office Salaries Depreciation-Auto(Sales) Total Fixed Expenses $0 None $0 None $0 NoneAdvertising Expns. ($1,176/8,400) x 9,000 $1,260 SO None Travel Expense($4,032/8,400) x 9,000$4,320 $0 None Free Sample given ($1,680/8,400) x 9,000- $1,800 Sales Commissions ($1,680/8,400) x 9,000$1,800 $1,800 F Total Expenses Fixed expenses As per master budget as they will not vary with sales units.