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.

Transcribed Image Text:

Sales in units Variable expenses Soria Company Clothing Department Budget Report For the Month Ended October 31, 2022 Budget Actual 8,000 10,000 $2,400 $ 2,600 720 850 3,600 4,100 1,600 1,400 8,320 8,950 1,500 1,500 1,200 1,200 800 800 500 500 4,000 4,000 $12,320 $12,950 Sales commissions Advertising expense Travel expense Free samples given out Total variable Fixed expenses Rent Sales salaries Office salaries Depreciation-autos (sales staff) Total fixed Total expenses Difference Favorable F Unfavorable U 2,000 F $ 200 U 130 U 500 U 200 F 630 U -0- $630 U