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As a sales manager, Joe James was given the following static budget report for selling expenses in the Clothing Department of Johnson Company for the month of October.

Johnson Company

Clothing Department

Budget Report

For the month ended October 31, 2020

___________________________________________________________________________________________________________________________________________

Budget Actual

____________________________________________________________________________________________________________________________________________

Sales in units 7,500 11,000 3,500 Favorable

Variable expenses

Sales commissions 1,800 3,080 1,280 Unfavorable

Advertising expense 1,050 990 60 Favorable

Travel expense 3,300 4,950 1,650 Unfavorable

Free samples given out 1,275 1,540 265 Unfavorable

Total variable 7,425 10,560 3,135 Unfavorable

Fixed expenses

Rent 1,600 1,600 -0- Neither

Sales salaries 1,100 1,100 -0- Neither

Office salaries 900 900 -0- Neither

Depreciation-autos(sales staff) 600 600 -0- Neither

Total fixed 4,200 4,200 -0- Neither

Total expenses $11,625 $14,760 $3,135 Unfavorable

As a result of this budget, 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.

-Prepare a budget report based on flexible budget data to help Joe.

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