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 COMPANYClothing DepartmentBudget ReportFor the Month Ended October 31, 2020 Difference Budget Actual FavorableUnfavorableNeither Favorablenor UnfavorableSales in units7,500 9,000 1,500FavorableVariable expenses Sales commissions$1,500 $2,160 $660Unfavorable Advertising expense750 630 120Favorable Travel expense3,000 3,150 150Unfavorable Free samples given out1,125 990 135Favorable Total variable6,375 6,930 555UnfavorableFixed expenses Rent1,000 1,000 –0–Neither Favorable nor Unfavorable Sales salaries1,000 1,000 –0–Neither Favorable nor Unfavorable Office salaries600 600 –0–Neither Favorable nor Unfavorable Depreciation—autos (sales staff)400 400 –0–Neither Favorable nor Unfavorable Total fixed3,000 3,000 –0–Neither Favorable nor UnfavorableTotal expenses$9,375 $9,930 $555UnfavorableAs 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 COMPANYSelling Expense Flexible Budget ReportClothing DepartmentFor the Month Ended October 31, 2020 Difference Budget Actual FavorableUnfavorableNeither Favorablenor UnfavorableSelect an opening flexible budget report item Advertising ExpenseDepreciation—Sale Staff AutosFixed ExpensesFree SamplesOffice SalariesRentSales CommissionsSales in UnitsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravel ExpenseVariable Expenses Enter a number Enter a number Select an opening line for section one Advertising ExpenseDepreciation—Sale Staff AutosFixed ExpensesFree SamplesOffice SalariesRentSales CommissionsSales in UnitsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravel ExpenseVariable Expenses Select a flexible budget report item $Enter a dollar amount $Enter the difference Select an option UnfavorableFavorableNeither Favorable nor UnfavorableSelect a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option FavorableUnfavorableNeither Favorable nor UnfavorableSelect a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option FavorableUnfavorableNeither Favorable nor UnfavorableSelect a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option FavorableUnfavorableNeither Favorable nor UnfavorableSelect a closing line for section one Enter a total amount for section one Enter a total amount for section one Enter the differenceSelect an option FavorableUnfavorableNeither Favorable nor UnfavorableSelect an opening line for section two Select a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option Neither Favorable nor UnfavorableUnfavorableFavorableSelect a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option Neither Favorable nor UnfavorableUnfavorableFavorableSelect a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option Neither Favorable nor UnfavorableUnfavorableFavorableSelect a flexible budget report item Enter a dollar amount Enter a dollar amount Enter the differenceSelect an option Neither Favorable nor UnfavorableUnfavorableFavorableSelect a closing line for section two Enter a total amount for section two Enter a total amount for section two Enter the differenceSelect an option Neither Favorable nor UnfavorableUnfavorableFavorableSelect a closing flexible budget report item $Enter a total dollar amount $Enter a total dollar amount $Enter the difference Select an option FavorableUnfavorableNeither Favorable nor Unfavorable

The flexible budget is a better tool for performance evaluation. It compares the budgeted and actual…

Answered: As sales manager, Joe Batista was given…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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
	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Sales in units	7,500	9,000	1,500	Favorable
Variable expenses
Sales commissions	$1,500	$2,160	$660	Unfavorable
Advertising expense	750	630	120	Favorable
Travel expense	3,000	3,150	150	Unfavorable
Free samples given out	1,125	990	135	Favorable
Total variable	6,375	6,930	555	Unfavorable
Fixed expenses
Rent	1,000	1,000	–0–	Neither Favorable nor Unfavorable
Sales salaries	1,000	1,000	–0–	Neither Favorable nor Unfavorable
Office salaries	600	600	–0–	Neither Favorable nor Unfavorable
Depreciation—autos (sales staff)	400	400	–0–	Neither Favorable nor Unfavorable
Total fixed	3,000	3,000	–0–	Neither Favorable nor Unfavorable
Total expenses	$9,375	$9,930	$555	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
	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Select an opening flexible budget report item Advertising ExpenseDepreciation—Sale Staff AutosFixed ExpensesFree SamplesOffice SalariesRentSales CommissionsSales in UnitsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravel ExpenseVariable Expenses	Enter a number	Enter a number
Select an opening line for section one Advertising ExpenseDepreciation—Sale Staff AutosFixed ExpensesFree SamplesOffice SalariesRentSales CommissionsSales in UnitsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravel ExpenseVariable Expenses
Select a flexible budget report item	$Enter a dollar amount		$Enter the difference	Select an option UnfavorableFavorableNeither Favorable nor Unfavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a closing line for section one	Enter a total amount for section one	Enter a total amount for section one	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select an opening line for section two
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option Neither Favorable nor UnfavorableUnfavorableFavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option Neither Favorable nor UnfavorableUnfavorableFavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option Neither Favorable nor UnfavorableUnfavorableFavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option Neither Favorable nor UnfavorableUnfavorableFavorable
Select a closing line for section two	Enter a total amount for section two	Enter a total amount for section two	Enter the difference	Select an option Neither Favorable nor UnfavorableUnfavorableFavorable
Select a closing flexible budget report item	$Enter a total dollar amount	$Enter a total dollar amount	$Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable

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