Steph Gates, sales manager of Pluto Computers Ltd, was given the following budget performance report for selling

Question:

Steph Gates, sales manager of Pluto Computers Ltd, was given the following budget performance report for selling expenses in the marketing software department for the month of April 2017.

The recently appointed managing director of the company was pleased that Steph had been able to increase her department’s sales by 20% over the budgeted sales of 12 000 units. On the other hand, Steph came in for some severe criticism for the apparent blow-out of selling expenses in her department. Steph felt that the criticism she received was unfounded, because she believed that, given the level of sales volume achieved, the selling expenses were under control. She is unsure how to argue her case with the managing director, and approaches you as an accountant to help her.

PLUTO COMPUTERS LTD Marketing Software Budget Report for the month ended 30 April 2017
	Budget		Actual		Variance
Sales in units		12 000		14 400		2 400	F
Fixed expenses: Sales salaries Office salaries Rent Depreciation — delivery vehicles	$	1 800 1 200 2 250 750	$	1 800 1 200 2 250 750	$	— — — —
Total fixed expenses		6 000		6 000		—
Variable costs: Sales commissions Advertising expense Free samples and promotions Travel expense		2 400 1 200 1 440 6 000		3 168 1 200 2 016 6 912		768 — 576 912	U U U U
Total variable expenses		11 040		13 296		2 256	U
Total expenses	$	17 040	$	19 296	$	2 256	U