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.
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GARBER COMPANY
Clothing Department
Budget Report
For the Month Ended October 31, 2008
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Difference
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Favorable F
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Budget
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Actual
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Unfavorable U
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Sales in units
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8,000
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10,000
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2,000
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F
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Variable expenses
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Sales commissions
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$ 2,000
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$ 2,600
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$ 600
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U
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Advertising expense
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800
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850
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50
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U
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Travel expense
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3,600
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4,000
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400
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U
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Free samples given out
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1,600
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1,300
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300
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F
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Total variable
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8,000
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8,750
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750
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U
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Fixed expenses
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Rent
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1,500
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1,500
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-0-
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Sales salaries
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1,200
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1,200
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-0-
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Office salaries
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800
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800
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-0-
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Depreciation-autos (sales staff)
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500
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500
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-0-
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Total fixed
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4,000
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4,000
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-0-
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Total expenses
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$12,000
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$12,750
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$ 750
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U
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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.