Mark Fletcher, president of SoftGro, Inc., was looking forward to seeing the performance reports for November because he knew the company's sales for the month had exceeded budget by a considerable margin. SoftGro, a distributor of educational software packages, had been growing steadily for approximately two years. Fletcher's biggest challenge at this point was to ensure that the company did not lose control of expenses during this growth period. When Fletcher received the November reports, he was dismayed to see the large unfavorable variance in the company's Monthly Selling Expense Report that follows.

SOFTGRO, INC. Monthly Selling Expense Report for the Month of November Annual November November November Budget Budget Actual Variance Unit sales . 2,000,000 280,000 310,000 30,000 Dollar sales 580,000,000 $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 $ 1.660,000 $ 10.000 U Staff salaries 1,500,000 125,000 125,000 Sales salaries 1,296,000 108,000 115.400 7,400 U Commissions ..." 3,200,000 448,000 496.000 48,000 U Per diem expense 1,782,000 148,500 162.600 14,100 U Office expenses 4,080,000 340,000 358.400 18,400 U Shipping expenses 6,750,000 902,500 976,500 74,000 U Total expenses 538,408,000 $ 3,722,000 $ 3,893,900 $ 171,900 U