Problem 11-42 Flexible Budget; Performance Report (LO 11-1, 11-6) Mark Fletcher, president of SoftGro, Inc., was lookIng fonward to seelng the performance reports for November because he knew the company's sales for the month had exceeded budget by a considerable margin. SoftGro, a dlstrloutor of educational software packages, had been growing steadlly 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 perlod. When Fletcher recelved the November reports, he was dismayed to see the large unfavorable varlance in the company's Monthly Selling Expense Report that follows. Fletcher called in the company's new controller, Susan Porter, to discuss the Implications of the varlances reported for November and to plan a strategy for lmproving performance. Porter suggested that the company's reporting format might not be glving Fletcher a true plcture of the company's operations. She proposed that SoftGro Implement flexible 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. Porter dlscovered the following Information about the behavior of SoftGro's selling expenses. - The total compensation pald to the sales force conslsts of a monthly base salary and a commlssion; the commission varles with sales dollars. - Sales office expense is a semlvarlable cost with the varlable portion related to the number of orders processed. The foced portion of offlce expense is $5,160,000 annuslly and is incurred unlformly throughout the year. - Subsequent to the adoption of the annual budget for the current year, SoftGro declded to open a new sales territory. As a consequence, approval was given to hire slx additional salespeople effective November 1. Porter declded that these adoltional slx people should be recognized In her revised report. - Per clem relmbursement to the sales force, whlle a floved amount per day, is varlable with the number of sales personnel and the number of days spent travellng. SoftGro's original budget was based on an average sales force of 90 people throughout the year with each salesperson travellng 15 days per month. - The compary's shipping expense is a semlvarlable cost with the varlable portion, $7.00 per unit, dependent on the number of units sold. The flied portion is incurred unlformly throughout the year. Required: 1. Why would Susan Porter propose that SotGro 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 SoftGro's control over selling expenses. Complete this question by entering your answers in the tabs below. Prepare a revised Manthly Selling Expense Report for November that would permit Mark Fletcher to more clearly evaluste SoftGra's control aver selling expenses. (Indicate the effect of esch variance by selecting "Favorable" or "Unfavorable". Select. "None" and enter " 0 " for no effect (1.e., zero variance). Do nat round intermediate calculationa.)