Porter discovered the following information about the behavior of SoftGro's selling expenses. The total compensation paid to the sales force consists of a monthly base salary and a commission; the commission varies with sales dollars. Sales office expense is a semivariable cost with the variable portion related to the number of orders processed. The fixed portion of ofce expense is $5,400,000 annually and is incurred uniformly throughout the year. Subsequent to the adoption ofthe annual budget for the current year, SoftGro decided to open a new sales territory. As a consequence, approval was given to hire six additional salespeople effective November 1. Porter decided that these additional six people should be recognized in her revised report. Per diem reimbursement to the sales force. while a fixed amount per day, is variable with the number of sales personnel and the number of days spent traveling. SottGro's original budget was based on an average sales force of 90 people throughout the year with each salesperson traveling 15 days per month. The company's shipping expense is a semivariable cost with the variable portion, $5.00 per unit, dependent on the number of units sold. The xed portion is incurred uniformly throughout the year. Required: 1. Why would Susan Porter propose that SoGro use flexible budgeting in this situation? 2. Prepare a revised Monthly Selling Expense Report for November that would permit Mark Fletcher to more clearly evaluate SoGro's control over selling expenses. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Why would Susan Porter propose that SoftGro use flexible budgeting in this situation? (Select "Yes" if the statement is a benet of allocating utility costs to the divisions, and "No" if it is not a benet.) Flexible budgeting provides management with the tools to evaluate the effects of varying levels of activity on costs, revenues, and prots. Flexible budgeting has a direct impact on actual results. Flexible budgeting improves the anaIySIs of actual results. Flexible budgeting enables management to improve planning and decision making Required 2 ) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a revised Monthly Selling Expense Report for November that would permit Mark Fletcher to more clearly evaluate SoftGro's control over selling expenses. {Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculations.) ( Required 1 Mark Fletcher, president of SoftGro, Inc., was looking forward to seeing the performance reports for November because he knew the company's sales for the month had exceeded budget by a considerable margin. SoGro, a distributor of educational software packages. had been growing steadily for approximately two years. Fletcher's biggest challenge at this point was to ensure that the company did not lose control of expenses during this growth period. When Fletcher received the November reports. he was dismayed to see the large unfavorable variance in the company's Monthly Selling Expense Report that follows. SDFTGRO, INC. Monthly Selling Expense Report For the Month of November Annual 1 November November November Budget Budget Actual Variance Unit sales 2,959,999 292,999 322,999 39,999 Dollar sales $149,329,999 $21,924,999 $23,194,999 $2,169,999 Orders processed 99,999 9,599 8,899 (799) Sales personnel per month 99 99 96 (6) Advertising ,9 32,499,999 $ 2,799,999 $ 2,729,999 $ 29,999u Staff salaries 2,999,999 249,999 249,999 Sales salaries 3,924,999 252,999 269,599 17,599u Commissions 5,932,999 949,999 927,359 96,499u Per diem expense 3,492,999 283,599 399,299 25,799U office expenses 9,999,999 759,999 796,599 36,699u Shipping expenses 11,839,999 1, 591,999 1,713,999 122,999U Total expenses $ 68,519,899 $ 6,657,469 $ 6,965,569 $ 388,296U Fletcher called in the company's new controller, Susan Porter, to discuss the implications of the variances reported for November and to plan a strategy for improving performance. Porter suggested that the company's reporting format might not be giving Fletcher a true picture ofthe company's operations. She proposed that SoftGro implement exible budgeting. Porter offered to redo the Monthly Selling Expense Report for November using flexible budgeting so that Fletcher could compare the two reports and see the advantages of flexible budgeting