As sales manager, joe batista was given the following static budget report for selling expenses in the clothing department of soria company for the month of october.
soria company
clothing department
budget report
for the month ended october 31, 2014
difference
budget
actual
favorable (f)
unfavorable (u)
neither favorable
nor unfavorable (n)
sales in units
8,000
10,200
2,200
f
variable expenses
sales commissions
$1,840
$2,754
$914
u
advertising expense
1,120
816
304
f
travel expense
3,360
4,284
924
u
free samples given out
1,520
1,224
296
f
total variable
7,840
9,078
1,238
u
fixed expenses
rent
1,400
1,400
–0–
sales salaries
1,300
1,300
–0–
office salaries
900
900
–0–
depreciation—autos (sales staff)
500
500
–0–
total fixed
4,100
4,100
–0–
total expenses
$11,940
$13,178
$1,238
u
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.
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