As sales manager, Kajsa Keyser was given the following static budget report for selling expenses in the clothing department of Dunham Company for the month of October:
DUNHAM COMPANY
Clothing Department
Budget Report
Month Ended October 31, 2012

As a result of this budget report, Kajsa was called into the president's office and congratulated on her fine sales performance. She was reprimanded, however, for allowing her costs to get out of control. Kajsa knew something was wrong with the performance report that she had been given. However, she was not sure what to do and has come to you for advice.
Instructions
(a) Prepare a budget report based on flexible budget data to help Kajsa.
(b) Should Kajsa have been reprimanded? Explain.

Transcribed Image Text:

Difference: Favourable (F)/ Budget 8,000 Actual 0,000 Unfavourable( Sales in units Variable costs 2,000 F Sales commissions Advertising expense Travel expense Free samples given 2,000 700 U 100 U 200 U 100 F 900 U $ 2,700 out Total variable costs 2,400 1,600 6,800 1,500 7,700 Fixed costs 1,500 1,000 1,500 1,000 Sales salaries Office salaries Depreciation-vehicles (sales staff) Total fixed costs 3,800 $11,500 Total costs $10,600 900 U