As sales manager, Magic Johnson was given the following static budget report for selling expenses in the Clothing Department of Lakers Company for the month of October.

As a result of this budget report, Magic 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. Magic 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 Magic.(b) Should Magic have been reprimanded? Explain.

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LAKERS COMPANY Clothing Department Selling Expense Budget Report For the Month Ended October 31, 2012 Difference Favorable F Unfavorable U Budget Actual Sales in units 8,000 10,000 2,000 F Variable expenses $ 2,600 $ 2,000 800 3,600 $ 600 U 50 U Sales commissions Advertising expense Travel expense Free samples given out 850 4,000 400 U 300 F 1,600 1,300 Total variable 8,000 8,750 750 U Fixed expenses Rent 1,500 1,500 Sales salaries 1,200 1,200 Office salaries 800 800 Depreciation- autos (sales staff) 500 500 Total fixed 4,000 4,000 $ 750 U Total expenses $12,000 $12,750