As sales manager, Hank Short was given the following static budget report for selling expenses in the Winter Sports Department of Jennings Outdoor Company for the month of November. Jennings Outdoor Company Winter Sports Department Budget Report For the Month Ended November 30, 2020 Budget 4,100 Actual 4,600 Difference Favorable F Unfavorable U 500 F $123,000 $130,700 36,900 39,700 188,600 206,200 110,700 102,700 459,200 479,300 $7,700 U 2,800 U 17,600 U 8,000 F 20,100 U Sales in units Variable expenses Sales commissions Advertising expense Travel expense Demonstration models given out Total variable Fixed expenses Rent Sales salaries Office salaries Depreciation - vans (sales staff) Total fixed Total expenses 7,100 59,800 40,100 2,500 109,500 $568,700 7,100 59,800 40,100 3,000 110,000 $589,300 -0- 500 U 500 U $20,600 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. Prepare a budget report based on flexible budget data to help Hank. (Round per unit answers to 2 decimal places, e... 15.25.) Jennings Outdoor Company Winter Sports Department Flexible Budget Report For the Month Ended November 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Per Unit Budget Actual 4,600 C 4,600 Sales in Units Variable Expenses Sales Commissions 138000 130700 7300 41400 39700 211600 206200 1700 5400 21500 35900 Favorable Favorable Favorable Favorable Favorable Advertising Expense Travel Expense Free Demonstration Models Total Variable Fixed Expenses Rent 124200 102700 515200 479300 7100 Sales Salaries Office Salaries 40100 i i i 500 i 500 i 35400i Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable Unfavorable Unfavorable Favorable 2500 Depreciation - Auto (Sales Staff) Total Fixed 109500 110000 Total Expenses 624700 $ 589300 $ After Hank because familiar with the flexible budget report, he began to analyze the numbers. Hank feels that sales can be increased if Jennings Outdoor Company would increase sales commissions to $31.00 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. Jennings Outdoor Company Winter Sports Department Results For the Month Ended December 31, 2020 Sales in units 5,500 Variable expenses Sales commissions $164,100 Advertising expense 42,200 Travel expense 245,600 Demonstration models given out 127,200 Total variable 579,100 Fixed expenses Rent 7,100 Sales salaries 59,800 Office salaries 40.100 Depreciation - vans (sales staff) 3,000 Total fixed 110,000 Total expenses $689,100 Prepare a budget report based on flexible budget data. The new depreciation amount has been included in the budgeted fixed costs. (Round per unit answers to 2 decimal places, e.g. 15.25.) Jennings Outdoor Company Winter Sports Department Flexible Budget Report Difference Favorable Unfavorable Neither Favorable nor Unfavorable Per Unit Budget Actual Do you think the new plan is valid? Explain It appears that the new plan is a as favorable total variance is by$ than in November. As sales manager, Hank Short was given the following static budget report for selling expenses in the Winter Sports Department of Jennings Outdoor Company for the month of November. Jennings Outdoor Company Winter Sports Department Budget Report For the Month Ended November 30, 2020 Budget 4,100 Actual 4,600 Difference Favorable F Unfavorable U 500 F $123,000 $130,700 36,900 39,700 188,600 206,200 110,700 102,700 459,200 479,300 $7,700 U 2,800 U 17,600 U 8,000 F 20,100 U Sales in units Variable expenses Sales commissions Advertising expense Travel expense Demonstration models given out Total variable Fixed expenses Rent Sales salaries Office salaries Depreciation - vans (sales staff) Total fixed Total expenses 7,100 59,800 40,100 2,500 109,500 $568,700 7,100 59,800 40,100 3,000 110,000 $589,300 -0- 500 U 500 U $20,600 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. Prepare a budget report based on flexible budget data to help Hank. (Round per unit answers to 2 decimal places, e... 15.25.) Jennings Outdoor Company Winter Sports Department Flexible Budget Report For the Month Ended November 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Per Unit Budget Actual 4,600 C 4,600 Sales in Units Variable Expenses Sales Commissions 138000 130700 7300 41400 39700 211600 206200 1700 5400 21500 35900 Favorable Favorable Favorable Favorable Favorable Advertising Expense Travel Expense Free Demonstration Models Total Variable Fixed Expenses Rent 124200 102700 515200 479300 7100 Sales Salaries Office Salaries 40100 i i i 500 i 500 i 35400i Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable Unfavorable Unfavorable Favorable 2500 Depreciation - Auto (Sales Staff) Total Fixed 109500 110000 Total Expenses 624700 $ 589300 $ After Hank because familiar with the flexible budget report, he began to analyze the numbers. Hank feels that sales can be increased if Jennings Outdoor Company would increase sales commissions to $31.00 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. Jennings Outdoor Company Winter Sports Department Results For the Month Ended December 31, 2020 Sales in units 5,500 Variable expenses Sales commissions $164,100 Advertising expense 42,200 Travel expense 245,600 Demonstration models given out 127,200 Total variable 579,100 Fixed expenses Rent 7,100 Sales salaries 59,800 Office salaries 40.100 Depreciation - vans (sales staff) 3,000 Total fixed 110,000 Total expenses $689,100 Prepare a budget report based on flexible budget data. The new depreciation amount has been included in the budgeted fixed costs. (Round per unit answers to 2 decimal places, e.g. 15.25.) Jennings Outdoor Company Winter Sports Department Flexible Budget Report Difference Favorable Unfavorable Neither Favorable nor Unfavorable Per Unit Budget Actual Do you think the new plan is valid? Explain It appears that the new plan is a as favorable total variance is by$ than in November