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 3,900 Actual 4,500 Difference Favorable F Unfavorable U 600 F $113,100 $122,800 35,100 39,100 187,200 209,700 105,300 99,500 440,700 471,100 $9,700 U 4,000 U 22,500 U 5,800 F 30,400 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 -0- 7,200 7,200 59,700 59,700 40,100 40,100 2,400 2,900 * 109,400 109,900 $550,100 $581,000 -O- 500 U 500 U $30,900 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. 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 4500 4500 Variable Expenses Sales Commissions 130500 $ 122800 $ Advertising Expense 40500 39100 Travel Expense 216000 209700 7700 1400 6300 22000 37400 Favorable Favorable Favorable Favorable Favorable Free Demonstration Models 27 99500 121500 508500 Total Variable $ 113 471100 Fixed Expenses Rent 7200 7200 59700 Sales Salaries 59700 Office Salaries 40100 40100 Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable (Neither Favorable nor Unfavorable 4) Unfavorable Unfavorable 2400 2900 Depreciation - Auto (Sales Staff) Total Fixed 500 500 i i 109400 109900 Total Expenses 617900 $ 581000 36900 i Favorable e Textbook and Media Should Hank have been reprimanded? Explain. Hank ( should not be reprimanded as Hank managed the expenses in his department. e Textbook and Media Attempts: 1 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 $30.00 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 $158,500 Advertising expense 41,900 Travel expense 256,700 Demonstration models given out 127,000 Total variable 584,100 Fixed expenses Rent 7,200 Sales salaries 59,700 Office salaries 40,100 Depreciation - vans (sales staff) 2,900 Total fixed 109,900 Total expenses $694,000 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, eg. 15.25.) 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, eg. 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