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.

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.
Instructions
(a) Prepare a budget report based on flexible budget data to help Joe.
(b) Should Joe have been reprimanded?Explain.

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Soria Company Clothing Department Budget Report For the Month Ended October 3, 2014 Difference Favorable F Unfavorable U 2,000 F Budget 8,000 Actual 10,000 Sales in units Variable expenses Sales commissions Advertising expense Travel expense Free samples given out 2,400 2,600 720 3,600 1,600 8,320 850 4,100 1,400 8,950 200 U 130 U 500 U 200 F 630 U Total variable xed expenses Rent Sales salaries Office salaries Depreciation-autos (sales staff) 1,500 1,200 800 500 4,000 $12,320 1,500 1,200 800 500 4,000 $12,950 Total fixed Total expenses 630 U