Tim, a business owner with about $100,000 in annual sales and $5,000 net profit last year, notices some variances (see below) when comparing his actual annual numbers to budgeted numbers this year. Analyze these variances and comment on what likely happened over the past year. Also, make recommendations on what Tim should do with budgeting and operations next year.

Sales $880 unfavourable

Cost of Goods Sold $760 favourable

Variable selling expenses $280 favourable

Fixed selling expenses $200 favourable

Fixed administrative expenses $600 favourable