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 Budget Actual 8,000 10,000 2,000 Favorable Sales in units Variable expenses Sales commissions $ 2,400 $ 2,600 $ 200 Unfavorable Advertising expense 720 850 130 Unfavorable Travel expense 3,600 4,100 500 Unfavorable Free samples given out 1,600 1,400 200 Favorable Total variable 8,320 8,950 630 Unfavorable Fixed expenses Rent 1,500 1,500 -0- Sales salaries 1,200 1,200 -0- Office salaries 800 800 -0- Depreciation-autos (sales staff) 500 500 -0- Total fixed 4,000 4,000 -0- Total expenses $12,320 $12,950 $630 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.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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