s 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 11,000 3,500 Favorable Variable expenses Sales commissions $1,950 $2,970 $1,020 Unfavorable Advertising expense 975 1,210 235 Unfavorable Travel expense 3,600 3,850 250 Unfavorable Free samples given out 1,200 1,540 340 Unfavorable Total variable 7,725 9,570 1,845 Unfavorable Fixed expenses Rent 1,500 1,500 –0– Neither Favorable nor Unfavorable Sales salaries 1,300 1,300 –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 4,300 4,300 –0– Neither Favorable nor Unfavorable Total expenses $12,025 $13,870 $1,845 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

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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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
	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Sales in units	7,500	11,000	3,500	Favorable
Variable expenses
Sales commissions	$1,950	$2,970	$1,020	Unfavorable
Advertising expense	975	1,210	235	Unfavorable
Travel expense	3,600	3,850	250	Unfavorable
Free samples given out	1,200	1,540	340	Unfavorable
Total variable	7,725	9,570	1,845	Unfavorable
Fixed expenses
Rent	1,500	1,500	–0–	Neither Favorable nor Unfavorable
Sales salaries	1,300	1,300	–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	4,300	4,300	–0–	Neither Favorable nor Unfavorable
Total expenses	$12,025	$13,870	$1,845	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.)