Question

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 4,100 Actual 4,600 Difference Favorable F Unfavorable U 500 F $123,000 $130,700 36,900 39,700 188,600 206,200 110,700 102,700 459,200 479,300 $7,700 U 2,800 U 17,600 U 8,000 F 20,100 V 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 7,100 7,100 59,800 59,800 40.100 40.100 2,500 3,000 * 109,500 110,000 $568,700 $589,300 500 U 500 U $20,600 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.

Answer 1

Flexible budget Report
For the month ended November 30, 2020
	Per unit	Budget	Actual		Favorable Unfavorable Neither favorable nor unfavorable
Sales in units		4,600	4,600
Variable Costs
Sales Commissions	$              30.00	$ 138,000.00	$    130,700.00	$                      7,300.00	Favorable
Advertising	$                9.00	$    41,400.00	$      39,700.00	$                      1,700.00	Favorable
Travel	$              46.00	$ 211,600.00	$    206,200.00	$                      5,400.00	Favorable
Demonstration models given out	$              27.00	$ 124,200.00	$    102,700.00	$                    21,500.00	Favorable
Total Variable costs	$            112.00	$ 515,200.00	$    479,300.00	$                    35,900.00	Favorable
Fixed Costs
Rent		$       7,100.00	$        7,100.00	$                                   -	Neither favorable nor unfavorable
Sales Salaries		$    59,800.00	$      59,800.00	$                                   -	Neither favorable nor unfavorable
Office Salaries		$    40,100.00	$      40,100.00	$                                   -	Neither favorable nor unfavorable
Depreciation		$       2,500.00	$        3,000.00	$                        (500.00)	Unfavorable
Total Fixed Cost		$ 109,500.00	$    110,000.00	$                        (500.00)	Unfavorable
Total Expenses		$ 624,700.00	$    589,300.00	$                    35,400.00	Favorable