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Q1) As sales manager, Terry Dewitt was given following static budget report for selling expenses in Clothing Department of Garber Company for month of October.

GARBER COMPANY

Clothing Department

Budget Report

For the Month Ended October 31, 2008

 

 

 

Difference

 

 

 

Favorable F

 

Budget

Actual

Unfavorable U

Sales in units

8,000

10,000

2,000

F

Variable expenses

 

 

 

 

Sales commissions

$ 2,000

$ 2,600

$  600

U

Advertising expense

800

850

50

U

Travel expense

3,600

4,000

400

U

Free samples given out

1,600

1,300

300

F

Total variable

8,000

8,750

750

U

Fixed expenses

 

 

 

 

Rent

1,500

1,500

-0-

 

Sales salaries

1,200

1,200

-0-

 

Office salaries

800

800

-0-

 

Depreciation-autos (sales staff)

500

500

-0-

 

Total fixed

4,000

4,000

-0-

 

Total expenses

$12,000

$12,750

$ 750

U

 As a result of this budget report, Terry was called into president's office and congratulated on his fine sales performance. He was reprimanded, though, for allowing his costs to get out of control. Terry knew something was wrong with performance report that he had been given. Though, he was not sure what to do, and comes to you for advice.

problems:

a. Make a budget report based on flexible budget data to help Terry.

b. Must Terry have been reprimanded? Describe.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M918469

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