PROBLEM 1.) 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	8,500		9,000		500	Favorable
Variable expenses
Sales commissions	$2,210		$2,160		$50	Favorable
Advertising expense	935		900		35	Favorable
Travel expense	3,740		3,600		140	Favorable
Free samples given out	2,040		990		1,050	Favorable
Total variable	8,925		7,650		1,275	Favorable
Fixed expenses
Rent	1,900		1,900		0	Neither Favorable nor Unfavorable
Sales salaries	1,100		1,100		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	4,500		4,500		0	Neither Favorable nor Unfavorable
Total expenses	$13,425		$12,150		$1,275	Favorable

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.)

PROBLEM 2.) Exercise 10-4 Myers 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		$1.40
Indirect materials		0.80
Utilities		0.30

Fixed overhead costs per month are Supervision $3,800, Depreciation $1,700, and Property Taxes $500. The company believes it will normally operate in a range of 7,40011,600 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.

Variable Costs				Fixed Costs
Indirect labor		$14,010		Supervision		$3,800
Indirect materials		8,030		Depreciation		1,700
Utilities		2,650		Property taxes		500

(a) Prepare a flexible budget performance report, assuming that the company worked 10,200 direct labor hours during the month. (List variable costs before fixed costs.) (b) Prepare a flexible budget performance report, assuming that the company worked 9,700 direct labor hours during the month. (List variable costs before fixed costs.)

PROBLEM 3.) Exercise 10-11

UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, LennyKirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments. Lenny has asked you to help him create a performance reporting system that will allow him to measure each segments performance in terms of its profitability. To that end, the following information has been collected on the Home Internet Service segment for the first quarter of 2017.

		Budgeted		Actual
Service revenue		$24,100		$27,000
Allocated portion of:
Building depreciation		10,700		10,700
Advertising		5,200		4,600
Billing		3,500		3,200
Property taxes		1,100		1,000
Material and supplies		1,700		1,400
Supervisory salaries		8,700		9,400
Insurance		3,500		3,600
Wages		2,800		3,500
Gas and oil		2,500		3,700
Equipment depreciation		1,700		1,200

Prepare a responsibility report for the first quarter of 2017 for the Home Internet Service Segment.