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.

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Soria Company Clothing Department Budget Report For the Month Ended October 31, 2020 Difference Favorable F Budget Actual Unfavorable U Sales in units 8,000 10,000 2,000 F Variable expenses Sales commissions $ 2,400 $ 2,600 $ 200 U Advertising expense Travel expense Free samples given out 720 850 130 U 500 U 3,600 1,600 4,100 1,400 200 F Total variable 8,320 8,950 630 U Fixed expenses Rent 1,500 1,200 800 1,500 1,200 Sales salaries Office salaries 800 Depreciation-autos (sales staff) 500 500 Total fixed 4,000 4,000 Total expenses $12,320 $12,950 $ 630 U