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 4,000 Actual 4,500 Difference Favorable F Unfavorable U 500 F Sales in units $132,000 $142,000 36,000 39,000 176,000 191,700 92,000 81,700 436,000 454,400 $10,000 U 3,000 U 15,700 U 10,300 F 18,400 U 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 -O- 8,2008,200 59,700 59,700 40,200 40,200 2,300 2,700* 110,400 110,800 $546,400 $565,200 400 U 400 U $18,800 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 eg 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 4500 L 4500 Sales in Units Variable Expenses Sales Commissions 149500 $ 142000 Advertising Expense 40500 39000 6500 1500 6300 Favorable Favorable Favorable Travel Expense 198000 191700 103500 a1700 21800 Favorable Free Demonstration Models Total Variable 490500 454400 36100 Favorable 8200 8200 Fixed Expenses Rent Sales Salaries Office Salaries Depreciation - Auto (Sales Staff) Total Fixed 59700 40200 2300 110400 600900 59700 40200 2700 110800 0 0 0 400 i 400 A Neither Favorable nor Unfavorable) Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable ) Unfavorable Unfavorable Total Expenses $ 565200 $ 35700 i Favorable Your answer is correct. 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 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 $34.00 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 5,400 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 5,400 Variable expenses Sales commissions $177,000 Advertising expense 41,100 Travel expense 230,100 Demonstration models given out 102,900 Total variable 551,100 Fixed expenses Rent 8,200 Sales salaries 59,700 Office salaries 40,200 Depreciation - vans (sales staff) 2,700 Total fixed 110,800 Total expenses $661,900 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, cg. 15.25.) Jennines Outdoor Company Winter Sports Department Flescible 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 eTextbook and Media