EduSoft SA distributes educational software packages used in the public schools nationwide. Thomas Maes, president of EduSoft, was looking forward to seeing the performance reports for September because he knew the companys sales for the month had exceeded the budget by a considerable margin. Maes biggest challenge at this point was to ensure that the company did not lose control of expenses during this growth period. When Maes received the September reports, he was dismayed to see the large unfavourable variance in the companys Monthly Selling Expense Report that follows:

EDUSOFT,SA

REVISED MONTHLY SELLING EXPENSES REPORT FOR SEPTEMBER

Annual budget Sep budget Sep actual Sep variance

Unit sales	2,000,000	280,000	305,000	25,000
Euro sales	80,000,000	11,200,000	12,400,000	1,200,000
Orders processed	54,000	6,500	5,800	(700)
Sales personnel per month	90	90	96	6
Advertising	19,800,000	1,650,000	1,645,000	( 5,000)
Staff salaries	1,560,000	130,000	130,000	-
Sales salaries	1,296,000	108,000	117,000	9,000
Commissions	3,200,000	560,000	620,000	60,000
Per day expense	1,782,000	148,500	168,960	20,460
Office expenses	4,080,000	340,000	362,300	22,300
Shipping expenses	6,750,000	902,500	970,200	67,700
Total expenses	38,468,000	3,839,000	4,013,460	174,460

Maes called in the companys new controller, Julie Willems, to discuss the implications of the variances reported for September and to plan a strategy for improving performance. Willems suggested that the companys reporting format might not be giving Maes a true picture of the companys operations. She proposed that EduSoft implement flexible budgeting, so that Maes could compare the two reports and see the advantages of flexible budgeting.

Willems discovered the following information about the behaviour of EduSofts selling expenses:

The total compensation paid to the sales force consists of a monthly base salary (sales salary) and a commission, which varies with sales euros.

Sales office expenses is a semi-variable cost with the variable portion related to the number of orders processed. The fixed portion of office expense is 3,000,000 annually and is incurred uniformly throughout the year.

Subsequent to the adoption of the annual budget for the current year, EduSoft decided to open a new sales territory. As a consequence, the company hired six additional salespeople effective 1 September. Willems decided that these additional six people should be recognised in her revised report.

Per-day reimbursement to the sales force, while a fixed amount per day, is variable with the number of sales personnel and the number of days spent travelling. EduSofts original budget was based on an average sales force of 90 people throughout the year with each salesperson travelling 15 days per month.

The companys shipping expense is semi-variable cost with the variable portion, 3 per unit, dependant on the number of units sold. The fixed portion is incurred uniformly throughout the year.

Required:

Prepare a revised Monthly Selling Expense Report for September that would permit Maes to evaluate more clearly EduSofts control over selling expenses. The report (table) should have a line for each selling expense item showing the appropriate budgeted amount, the actual selling expense and the monthly euro variance.