Chapter 10 – Weygandt Managerial 7e
Challenge Exercises Solutions
Solution
CE10-1
(a) Jennings Outdoor Company
Winter Sports Department
Flexible Budget Report
For the Month Ended November 30, 2017
Difference
Favorable F
Budget at Actual Costs at Unfavorable U
Sales in units Per Unit 4,500 4,500 0 F
Variable expenses
Sales commissions $ 30.00 $135,000 $128,000 $ 7,000 F
Advertising expense $ 9.50 42,750 41,750 1,500 F
Fixed expenses
Rent 7,500 7,500 0
Sales salaries 60,000 60,000 0
Office salaries 40,000 40,000 0
(b) No, Hank should not be reprimanded. Using the flexible budget report, one can see that Hank did
an excellent job of managing the expenses in his department and came in under budget at all
levels except for depreciation, which was easily explained by the new auto.
(c)
Jennings Outdoor Company
Winter Sports Department
Flexible Budget Report
For the Month Ended December 31, 2017
Difference
Favorable F
Budget at Actual Costs at Unfavorable U
Sales in units Per Unit 5,500 5,500 0 F
Variable expenses
Sales commissions $ 31.00 $170,500 $164,000 $ 6,500 F
Advertising expense $ 8.00 44,000 42,000 2,000 F
Travel expense $ 46.2 254,375 247,000 7,375 F
Fixed expenses
Rent 7,500 7,500 0
Sales salaries 60,000 60,000 0
Office salaries 40,000 40,000 0
CE 10-2
(a) Custer Company
Camping Department
Responsibility Report
For the year ended December 31, 2017
Difference
Favorable F
Budget Actual Unfavorable U
Sales $700,000 $678,000 $ 22,000 U
Variable costs
Cost of goods sold 340,000 315,000 25,000 F
Selling and administrative 46,000 47,000 1,000 U
Controllable fixed costs
Cost of goods sold 77,000 81,000 4,000 U
(b)
Budget Actual
Controllable margin $167,000 $184,000
Less: Other fixed costs 69,000 69,000
(c) Custer Company
Camping Department
Responsibility Report
For the year ended December 31, 2017
Difference
Favorable F
Budget Actual Unfavorable U
Sales $875,000 $873,000 $ 2,000 U
Variable costs
Cost of goods sold 425,000 420,000 5,000 F
Selling and administrative 57,500 56,000 1,500 F
Controllable fixed costs
Cost of goods sold 77,000 81,000 4,000 U
(d)
Budget Actual
Controllable margin $227,500 $245,000