As sales manager, Hank Short was given the following static budget report for selling expenses in the Winter Sports Department of Waterway Company for the month of November. Waterway Company Winter Sports Department Budget Report For the Month Ended November 30, 2020 Difference Favorable F Budget Actual Unfavorable U Sales in units 3,900 4,600 700 Variable expenses Sales commissions $124,800 $140,300 $15,500 U Advertising expense 39,000 44,600 5,600 U Travel expense 191,100 219,800 28,700 U Demonstration models given out 93,600 88,400 5,200 F Total variable 448,500 493,100 44,600 U Fixed expenses Rent 8,200 8,200 Sales salaries 60,000 60,000 -O- Office salaries 39,700 39,700 -O- Depreciation - vans (sales staff) 2,400 2,900 500 U Total fixed 110,300 110,800 500 U Total expenses $558,800 $603,900 $45,100 U The increase in depreciation was due to a new vehicle that had to be purchased as a result of an accident driving on snowy roads on the way to visit a customer. As a result of this budget report, Hank 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. Hank 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.WaterwayCompany Winter Sports Department Flexible Budget Report For the Month Ended November 30, 2020 Per Unit Budget Actual Sales in Units 4600 Variable Expenses Sales Commissions $ 32 147200 Advertising Expense 10 46000 Travel Expense 49 225400 Free Demonstration Models 24 110400 Total Variable $ 115 529000 Fixed Expenses Rent 8200 Sales Salaries 60000 Office Salaries 39700 Depreciation - Auto (Sales Staff) 2400 Total Fixed 110300 Total Expenses $ 639300 $ eTextbook and MediaWaterwayCompany Winter Sports Department Flexible Budget Report For the Month Ended November 30, 2020 Difference Favorable Unfavorable Neither Favorable budget Actual nor Unfavorable 4600 4600 147200 140300 6900 Favorable 46000 44600 1400 Favorable 225400 219800 5600 Favorable 110400 88400 22000 Favorable 529000 493100 35900 Favorable 820C 8200 Neither Favorable nor Unfavorable 60000 60000 0 Neither Favorable nor Unfavorable 39700 39700 0 Neither Favorable nor Unfavorable 2400 2900 500 i Unfavorable 110300 110800 500 i Unfavorable 639300 $ 603900 35400 i FavorableYour answer is partially correct. After Hank because familiar with the flexible budget report, he began to analyze the numbers. Hank feels that sales can be increased if Waterway Company would increase sales commissions to $33.00 per unit. This would allow them to reduce advertising expense to $8.00 per unit. Hank thinks that these changes will motivate the sales staff to sell at least 5,500 units. He is allowed to try his plan in December and had the following results. WaterwayCompany Winter Sports Department Results For the Month Ended December 31, 2020 Sales in units 5,500 Variable e Sales commissions $175,100 Advertising expense 41,800 Travel expense 262,300 Demonstration models given out 110,400 Total variable 589,600 Fixed expenses Rent 8,200 Sales salaries 60,000 Office salaries 39,700 Depreciation - vans (sales staff) 2,900 Total fixed 110,800 Total expenses $700,400 Prepare a budget report based on flexible budget data. The new depreciation amount has been included in the budgeted fixed costs. (Round per unit answers to 2 decimal places, e.g. 15.25.)Wiltel Sports Depal CITICTI Flexible Budget Report Per Unit Budget Actual $Flexible Budget Report Difference Favorable Unfavorable Neither Favorable :udget Actual nor Unfavorable