SECTION B: PROBLEM SOLVING QUESTIONS QUESTION 1: Flexible Budget Total mark for this question: 20 marks [Suggested time: 36 minutes] As sales manager, Joe Batista was given the following static budget report for October. selling expenses in the Clothing Department of Soria Company for the month of SORIA COMPANY Clothing Department Budget Report For the Month Ended October 31, 2017 Budget Actual Difference Favorable F Unfavorable U Sales in units 8,000 10,000 2,000 F Variable expenses Sales commissions $2,400 $2,600 $200 U Advertising expenses 720 850 130 U Travel expenses 3,600 4, 100 500 U Free samples given out 1,600 1,400 200 F Total variable 8,320 8,950 530 U Fixed expenses: Rent 1,500 1,500 0 Sales salaries 1,200 1,200 0 Office salaries 800 30C 0 Depreciation - autos 500 500 0 (sales staff) Total fixed 4,000 4,000 0 Total expenses $12,320 $12,950 $630 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 has been given. However, he was not sure what to do, and comes to you for advice. REQUIRED 1. Prepare a budget report based on flexible budget data to help Joe. (10 marks) 2. Should Joe have been reprimanded? Explain (4 marks) Page 11 of 15