Jennings Outdoor Company Winter Sports Department Budget Report For the Month Ended November 30, 2020 Budget 4,000 Actual 4,400 Difference Favorable F Unfavorable U 400 F $124,000 $129,400 36,000 38,000 204,000 218,900 100,000 88,200 464,000 474,500 $5,400 V 2,000 U 14,900 U 11,800 F 10,500 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 7,800 7,800 60,300 60,300 40,300 40,300 2,600 3,000 * 111,000 111,400 $575,000 $585,900 -O- 400 U 400 U $10,900 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. 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 $32.00 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 $169,400 Advertising expense 42,000 Travel expense 273,000 Demonstration models given out 116,200 Total variable 600,600 Fixed expenses Rent 7,800 Sales salaries 60,300 Office salaries 40,300 Depreciation - vans (sales staff) 3,000 Total fixed 111,400 Total expenses $712,000 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, e.g. 15.25.) Jennings Outdoor Company 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 than in November. Jennings Outdoor Company Winter Sports Department Budget Report For the Month Ended November 30, 2020 Budget 4,000 Actual 4,400 Difference Favorable F Unfavorable U 400 F $124,000 $129,400 36,000 38,000 204,000 218,900 100,000 88,200 464,000 474,500 $5,400 V 2,000 U 14,900 U 11,800 F 10,500 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 7,800 7,800 60,300 60,300 40,300 40,300 2,600 3,000 * 111,000 111,400 $575,000 $585,900 -O- 400 U 400 U $10,900 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. 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 $32.00 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 $169,400 Advertising expense 42,000 Travel expense 273,000 Demonstration models given out 116,200 Total variable 600,600 Fixed expenses Rent 7,800 Sales salaries 60,300 Office salaries 40,300 Depreciation - vans (sales staff) 3,000 Total fixed 111,400 Total expenses $712,000 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, e.g. 15.25.) Jennings Outdoor Company 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 than in November