Answer Happy

CE 23-1 As sales manager, Hank Short was given the folowing 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 Bus 4100 Actu 11.50 Difference Fawambie Unawambie UI 500 F $120,000 38.000 185,000 100.00 4430 $128.000 41.250 202.125 90.750 462.125 $ 8,000 U 3,250 U 17,125 U 20E 19.12 Sales in units Variable expenses Sales commissions Advertising expense Travel expense Demonstration models given out Total variable Fbed expenses Rent Sales salaries Orice salaries Depreciation - vans (sales staff) Total fled Total expenses 7,500 60,000 40,000 22.500 1100 SALON 7,500 60,000 40,000 3.000 110 S672.628 -0 -0 500 u 500 u 19.25 '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 new 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. Instructions (a) Prepare a budget report based on flexible budget data to help Hank (b) Should Hans have been reprimanded? Explain (c) After Hank because familar 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 $31 per unit. This would alow 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 unts. He is allowed to try his plan in December and had the following results CE 23-1 (pont) Jennings Outdoor Company Winter Sports Department Results For the Month Ended December 31, 2020 5. Sales nuits Variable expenses Sales commissions Advertising expense Travel expense Demonstration models given out Total variable Fbed expenses Rent Sales salaries Orice salaries Depreciation - vans (sales staff) Total fixed Total expenses $164,000 42.000 247,000 11100 599.000 7,500 60.000 40,000 3.000 114.00 $679.500 Prepare a budget report for December based on flexible budget data. The new depreciation amount should be included in the budgeted fixed costs. Do you think the new plan is vald? Explain.