Exercise 14-9 As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Grouper Company for the month of October. Grouper Company Clothing Department Budget Report For the Month Ended October 31, 2017 Difference Favorable Unfavorable Neither Favorable Budget Actual nor Unfavorable Sales in units 8,400 9,000 600 Favorable Variable expenses Sales commissions $1,680 $2,430 $750 Unfavorable Advertising expense 1,176 810 366 Favorable Travel expense 4,032 3,150 882 Favorable Free samples given out 1,680 990 690 Favorable Total variable 8,568 7,380 1,188 Favorable Fixed expenses Rent 1,800 1,800 -0- Neither Favorable nor Unfavorable Sales salaries 1,100 1,100 -0-Neither Favorable nor Unfavorable Office salaries 600 600 -0- Neither Favorable nor Unfavorable Depreciation-autos (sales staff) 500 500 -0-Neither Favorable nor Unfavorable Total fixed 4,000 4,000 -O-Neither Favorable nor Unfavorable Total expenses $12,568 $11,380 $1,188 Favorable 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. Exercise 14-3 Sarasota Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows. Indirect labor Indirect materials Utilities $1.10 0.70 0.20 Fixed overhead costs per month are Supervision $4,000, Depreciation $1,500, and Property Taxes $700. The company believes it will normally operate in a range of 6,400-10,000 direct labor hours per month. Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,200 direct labor hours. (List variable costs before fixed costs.) SARASOTA COMPANY Monthly Manufacturing Overhead Flexible Budget