Question
As a sales manager, Joe James was given the following static budget report for selling expenses in the Clothing Department of Johnson Company for the
As a sales manager, Joe James was given the following static budget report for selling expenses in the Clothing Department of Johnson Company for the month of October.
Johnson Company
Clothing Department
Budget Report
For the month ended October 31, 2020
___________________________________________________________________________________________________________________________________________
Budget Actual
____________________________________________________________________________________________________________________________________________
Sales in units 7,500 11,000 3,500 Favorable
Variable expenses
Sales commissions 1,800 3,080 1,280 Unfavorable
Advertising expense 1,050 990 60 Favorable
Travel expense 3,300 4,950 1,650 Unfavorable
Free samples given out 1,275 1,540 265 Unfavorable
Total variable 7,425 10,560 3,135 Unfavorable
Fixed expenses
Rent 1,600 1,600 -0- Neither
Sales salaries 1,100 1,100 -0- Neither
Office salaries 900 900 -0- Neither
Depreciation-autos(sales staff) 600 600 -0- Neither
Total fixed 4,200 4,200 -0- Neither
Total expenses $11,625 $14,760 $3,135 Unfavorable
As a result of this budget, 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.
-Prepare a budget report based on flexible budget data to help Joe.
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