Exercise 10-9

As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of SoriaCompany for the month of October.

SORIA COMPANY Clothing Department Budget Report For the Month Ended October 31, 2017 Difference Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable Sales in units 7,500 11,000 3,500 Favorable Variable expenses Sales commissions $1,950 $2,970 $1,020 Unfavorable Advertising expense 975 1,210 235 Unfavorable Travel expense 3,600 3,850 250 Unfavorable Free samples given out 1,200 1,540 340 Unfavorable Total variable 7,725 9,570 1,845 Unfavorable Fixed expenses Rent 1,500 1,500 0 Neither Favorable nor Unfavorable Sales salaries 1,300 1,300 0 Neither Favorable nor Unfavorable Office salaries 900 900 0 Neither Favorable nor Unfavorable Depreciationautos (sales staff) 600 600 0 Neither Favorable nor Unfavorable Total fixed 4,300 4,300 0 Neither Favorable nor Unfavorable Total expenses $12,025 $13,870 $1,845 Unfavorable

As a result of this budget report, Joe was called into the presidents 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. (List variable costs before fixed costs. Do not leave any answer field blank. Enter 0 for amounts.)

SORIA COMPANY Selling Expense Flexible Budget Report Clothing Department For the Month Ended October 31, 2017 Difference Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable Total Fixed Costs Fixed Costs Total Variable Costs Travel Expense Free Samples Office Salaries Sales Salaries Variable Costs Rent Advertising Expense Sales Commissions DepreciationSale Staff Autos Sales in Units Total Costs Free Samples Advertising Expense Sales in Units Rent Office Salaries Sales Commissions Variable Costs Sales Salaries Total Costs Total Fixed Costs Total Variable Costs DepreciationSale Staff Autos Travel Expense Fixed Costs Rent Fixed Costs Office Salaries Total Costs Total Fixed Costs DepreciationSale Staff Autos Sales Commissions Total Variable Costs Sales in Units Sales Salaries Travel Expense Variable Costs Advertising Expense Free Samples $ $ $ Favorable Neither Favorable nor Unfavorable Unfavorable Sales in Units Sales Commissions Office Salaries Advertising Expense Total Fixed Costs Total Costs Sales Salaries DepreciationSale Staff Autos Rent Total Variable Costs Travel Expense Fixed Costs Variable Costs Free Samples Neither Favorable nor Unfavorable Unfavorable Favorable Total Fixed Costs Sales in Units Rent Sales Salaries Total Costs Advertising Expense Free Samples Total Variable Costs Travel Expense Variable Costs DepreciationSale Staff Autos Sales Commissions Fixed Costs Office Salaries Favorable Unfavorable Neither Favorable nor Unfavorable Office Salaries Sales Commissions Advertising Expense Free Samples Fixed Costs Rent Sales in Units Travel Expense Sales Salaries Total Costs Total Fixed Costs Total Variable Costs Variable Costs DepreciationSale Staff Autos Unfavorable Favorable Neither Favorable nor Unfavorable Free Samples Advertising Expense Office Salaries DepreciationSale Staff Autos Fixed Costs Rent Variable Costs Total Costs Sales Commissions Total Variable Costs Sales in Units Sales Salaries Total Fixed Costs Travel Expense Favorable Unfavorable Neither Favorable nor Unfavorable DepreciationSale Staff Autos Total Variable Costs Variable Costs Sales Salaries Travel Expense Free Samples Total Fixed Costs Fixed Costs Office Salaries Advertising Expense Rent Sales Commissions Sales in Units Total Costs Office Salaries Sales Commissions DepreciationSale Staff Autos Fixed Costs Total Costs Total Fixed Costs Advertising Expense Sales in Units Variable Costs Free Samples Rent Total Variable Costs Sales Salaries Travel Expense Unfavorable Neither Favorable nor Unfavorable Favorable Total Variable Costs Fixed Costs Travel Expense Variable Costs Sales Salaries Free Samples Advertising Expense Office Salaries Rent Sales Commissions Total Costs Sales in Units Total Fixed Costs DepreciationSale Staff Autos Unfavorable Neither Favorable nor Unfavorable Favorable Office Salaries Sales Commissions Sales in Units Sales Salaries Total Costs Free Samples Total Fixed Costs Total Variable Costs DepreciationSale Staff Autos Travel Expense Advertising Expense Variable Costs Fixed Costs Rent Neither Favorable nor Unfavorable Favorable Unfavorable Office Salaries Sales in Units Rent Advertising Expense DepreciationSale Staff Autos Free Samples Total Fixed Costs Sales Salaries Sales Commissions Total Costs Fixed Costs Total Variable Costs Travel Expense Variable Costs Neither Favorable nor Unfavorable Unfavorable Favorable Total Costs Travel Expense Fixed Costs Sales in Units Total Fixed Costs Variable Costs Advertising Expense DepreciationSale Staff Autos Total Variable Costs Free Samples Sales Salaries Office Salaries Rent Sales Commissions Favorable Unfavorable Neither Favorable nor Unfavorable Free Samples Total Variable Costs Rent Sales Commissions Advertising Expense Variable Costs DepreciationSale Staff Autos Fixed Costs Travel Expense Office Salaries Sales in Units Sales Salaries Total Costs Total Fixed Costs $ $ $ Neither Favorable nor Unfavorable Favorable Unfavorable

ing Department Budget Report For the Month Ended October 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Sales in units 7,500 11,000 3,500 Favorable Variable expenses Sales commissions Advertising expense Travel expense Free samples given out $1,950 $2,970 $1,020 Unfavorable 975 1,210 235 Unfavorable 3,600 3,850 250 Unfavorable 1,200 1,540 340 Unfavorable 7,725 9,570 1,845 Unfavorable Total variable Fixed expenses Rent Sales salaries Office salaries 1,500 1,500 0- Neither Favorable nor Unfavorable 1,300 1,300 -Neither Favorable nor Unfavorable 900-0- Neither Favorable nor Unfavorable Depreciation-autos (sales sf 600 600 -0- Neither Favorable nor Unfavorable 4,300 4,300 -0Neither Favorable nor Unfavorable 900 Total fixed Total expenses $12,025 $13,870 $1,845 Unfavorable As a result of this budget report, Joe was called into the president's office and congratulated on his fine sales performance. He was repmanded, 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