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 Difference Favorable F Budget Actual Unfavorable U Sales in units 4,000 4,400 400 F Variable expenses $120,000 $124,400 $4,400 U Sales commissions Advertising expense 40,000 42,500 2,500 U Travel expense 168,000 178,500 10,500 U Demonstration models given out 97,100 108,000 10,900 F Total variable 442,500 6,500 U 436,000 Fixed expenses -0- Rent 7,300 7,300 Sales salaries 59,700 59,700 -0- Office salaries 39,800 39,800 -0- 2,800 * 500 U Depreciation - vans (sales staff) 2,300 109,100 Total fixed 109,600 500 U $7,000 U $545,100 $552,100 Total expenses *The increase in depreciation was due to a new vehicle that had to be purchased as a result of an accident driving on snowy roads on the way to visit a customer. As a result of this budget report, Hank was called into the president's office and congratulated on his fine sales performance. He was reprimanded, however, for allowing his costs to get out of control. Hank knew something was wrong with the performance report that he had been given. However, he was not sure what to do, and comes to you for advice. (a) v Your answer Is correct. Prepare a budget report based on flexible budget data to help Hank. (Round per unit answers to 2 decimal places, e.g. 15.25.) Jennings Outdoor Company Winter Sports Department Flexible Budget Report For the Month Ended November 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Per Unit Budget Actual Sales In Units 4400 4400 Varlable Expenses 2$ 24 24 132000 Favorable Sales Commissions 30 124400 7600 Advertising Expense Favorable 10 44000 42500 1500 Travel Expense Favorable 42 184800 178500 6300 97100 Favorable Free Demonstration Models 27 118800 21700 Total Variable Favorable 442500 109 479600 37100 Fixed Expenses Rent Neither Favorable nor Unfavorable 7300 7300 Neither Favorable nor Unfavorable Sales Salaries 59700 59700 Neither Favorable nor Unfavorable Office Salaries 39800 39800 Unfavorable Depreclation - Auto (Sales Staff) 2300 2800 500 Total Fixed 109100 109600 500 Unfavorable %24 588700 $ Total Expenses 2$ Favorable 552100 36600 eTextbook and Media Attempts: 2 of 3 used (c) 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 5,600 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 5,600 Variable expenses $167,100 Sales commissions Advertising expense 42,900 Travel expense 227,900 Demonstration models given out 129,600 Total variable 567,500 Fixed expenses Rent 7,300 59,700 Sales salaries Office salaries 39,800 Depreciation - vans (sales staff) 2,800 Total fixed 109,600 Total expenses $677,100 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 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 Budget Per Unit Actual Do you think the new plan is valid? Explain. * by $ It appears that the new plan is a * as favorable total variance is than in November. eTextbook and Media