CASE Background: Moonlight Clean Services (MCS) is a local business in the Tri-cities area. It provides cleaning services to residential households and commercial establishments. Both households and businesses sign contracts with MCS. As the contractor, MCs dispatches its crew to the locations. The crew performs the cleaning asper the contracts and reports back to the company main desk. The main desk then prepares the invoiceand sends them to the clients. Clients have one day to pay the invoice. Sales volume can vary from one quarter to the next. In terms of expenses, the main expense for MCs relates to labour. They pay crew members competitivewages and benefits. The wage rate is calculated on an hourly basis and is fixed for the entire year. The next expense item is cleaning supplies. MCS accounts for cleaning supplies relative to the hours worked. For example, they estimate that cleaning supplies are consumed at a rate of 0.2 litres per labour hour. This is a good measure because the longer it takes for a site to be cleaned, the more the consumption of cleaning supplies. Cleaning supplies are procured from a prominent vendor and the cost is fixed for the entire year. Sometimes clients are not happy about the cleaning services and register a complaint. In that case, the crew is dispatched again for a second cleaning. The hours accruing from such scenarios are not billed to the client as this constitutes a 'service recovery'. However, the crew is paid for such hours. Mcs maintains arecord of these hours and classifies them as 'unproductive hours', or 'unbilled hours. This is calculated as a percentage of revenue earning hours (e.g., 10% of revenue generating hours). For the purpose of this assignment, assume that there is no consumption of cleaning materials when this second cleaning is being done. Budget for the year 2021: The budget for the year 2021 was prepared in December 2020 and had the following components: Revenue: The revenue is calculated as number of hours that the crew works on a site, multiplied by the contracted rate with the client. The hours worked in the residential and commercial segments are shown separately, and there is a total for the combined hours worked. The revenue for each segment is arrived at by multiplying the hours for the segment by the rate. The budget is prepared for four quarters, one to four. For 2021, the budgeted sales hours were: 2 3 4 4,200 4,000 3,500 Quarter 1 Budgeted commercial sales in 4,000 hours Budgeted residential sales in hours 2,100 2,100 1,800 2,100 For 2021, the budgeted selling price per hours were: 1 2 3 4 Quarter Selling price per hour (commercial) Selling price per hour (residential) $39 $39 $39 $39 $42 $42 $42 $42 Direct Labour expense: MCS will pay its employees an hourly rate of $26 for the entire year. Cleaning supply usage: The budgeted usage is 0.28 litre / labour hour for the commercial segment and 0.17 litre/ labour hour for the residential segment. This is constant for the entire year. Cleaning supply expense: Budgeted expense is $5.70 per litre for the entire year. 4 Page Fixed overhead: To support the cleaning operations, there are four items of expenditure. These are designated as overheads and their budgeted expenses are as follows: General Administration related: Budgeted expense is $6,000 per quarter and is the same for all four quarters. Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Budgeted expense is $8,700 per quarter and is the same for all four quarters. Employee benefit related: Budgeted expenditure on gas is $6,000 and is the same for all four quarters. Maintenance: Budgeted expenditure on Maintenance related is $1,200 per quarter and is the same for all four quarters. Actual results for the year 2021. It is now January 7, 2022, and Moonlight Clean Services (MCS) is comparing the actual expenses against the budget. Here is what they found. Revenue: For 2021, the actual sales hours were: 1 2 3 4 Quarter Actual sales - commercial Actual sales - residential 3,700 4,300 3,900 3,900 2,250 2,350 1,800 2,000 For 2021, the actual hourly revenue was: 1 2 3 4 Quarter Actual selling price-commercial Actual selling price - residential $38 $38 $38 $46 $38 $46 $46 $46 5 Page Direct Labour expense: MCS paid its employees an hourly rate of $28 for the entire year. Cleaning supply usage: The actual usage was 0.27 litre / labour hour for the commercial segment and 0.15 litre/ labour hour for the residential segment. This was constant for the entire year. W Cleaning supply expense: Actual expense was $5.65 per liter for the entire year. Fixed overhead: To support the cleaning operations, there are four items of expenditure. These are designated as overheads and their budgeted expenses are as follows: General Administration related: Actual expense per quarter was as follows: Quarter 1 2 3 4 Amount 6,200 6,400 5,900 5,800 Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Actual expense was $8,500 per quarter and was the same for all four quarters. Employee benefit related: Actual expense per quarter was as follows: Quarter Amount 8,300 7,800 8,100 8,300 1 2 3 4 1 2 3 4 1,300 Maintenance: Actual expense per quarter was as follows: Quarter Amount 1,000 1,200 1,000 Unproductive (unbilled) factor: Cleaning crews had to work 14% over the revenue generating hours to attend to complaints and do a second cleaning. These hours were not billable to clients, but Moonlight Clean Services (MCS) would paythe employees for this time they worked. For the purpose of this assignment, assume that there is no consumption of cleaning materials when this second cleaning was done. Required: Part A: For this part you will use the template provided in Excel Workbook format. Complete the following steps in sequence: Step # One Two Three Four Five Spreadsheet title Activity Input Database Populate the section A4:G24 with data from the above case and develop the budget parameters. Input Database Populate the section K4:035 with data from the above case and develop the actual parameters. Static Budget Populate the section A7:F29 with data from the spreadsheet 'Input Database' and develop the static budget. Actual Budget Populate the section A7:F29 with data from the spreadsheet 'Input Database' and develop the actual budget. Flexible Budget Populate the section A7:F29 with data from the spreadsheet 'Input Database' and develop the flexible budget. Var Analysis - Static and Populate the section A5:E26 with data from the Flex spreadsheets 'Static Budget' and 'Actual Budget' and develop the static budget variance. Var Analysis - Static and Populate the section G5:326 with data from the Flex spreadsheet 'Actual Budget' and 'Flexible Budget' and develop the flexible budget variance. Material variances Using applicable data complete the analysis of Material variances for both the commercial and residential segments. Labour variances Using applicable data complete the analysis of Material variances for both the commercial and residential segments. Six Seven Eight Nine MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT-W22 Other guidelines: Data should be entered in the 'Input Database' spreadsheet only. For all other spreadsheets, you must use cell references, linking data from 'Input Database' or other spreadsheets. Do not enter data or calculations without cell references. To calculate variances, you need to use 'IF' formula. Part B: In week 10, your Professor will be discussing about ethical practices during budget preparation. One such practice involves use of budgetary slack'. Reflecting on this learning experience, you will write a memo to the CEO of MCS. The CEO is concerned regarding ethical practices and needs your advice. In your role as a consultant, write a memo explaining what unethical practices can budget preparers incorporate during budget preparation. This should be in your own words and no external research or references are needed. Structure of the memo: Word limit: 300 words maximum (penalty for going over this limit) Arial or Calibri font Memo format As MS Word document (any other format will receive a zero mark) Memo will be verified through Turnitin. Deliverables: Completed Excel workbook. Memo in MS Word format Delivery: Upload both the items to the assigned folder in eConestoga. Your Professor will advise you as to the due date of this assignment. Marking Key and Rubric: Included within the Excel workbook. Please review all items in the marking key before submission and ensure they are complete. 81 Page G56 X fic A . 1 j L M N P R S T V X Y z AA AB AC AD AE AF AG AH AL 1 B c D E (Company name) Operating Budget for the period Jan - Dec '21 Quarters 3 1 2 4 Year Marks 2 2 2 3 4 5 A 7 Sales budget 8 Sales Commercial 9 Sales residential 10 Total sales 11 12 13 Direct material budget 14 Variable costs commercial 15 Variable costs residential 16 Total variable costs 17 18 19 Labour budget 20 Commercial 21 Residential 22 Total labour 23 24 Fixed Overhead: 25 Receptionist 26 Depreciation 27 Gas 28 Maintenance 29 Total 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 Total 8 Cover page Read this first Static Budget Actual Budget Flexible Budget Var Analysis - Static and Flex Material variances Labour variances Input Database + Ready HI E 59% CASE Background: Moonlight Clean Services (MCS) is a local business in the Tri-cities area. It provides cleaning services to residential households and commercial establishments. Both households and businesses sign contracts with MCS. As the contractor, MCs dispatches its crew to the locations. The crew performs the cleaning asper the contracts and reports back to the company main desk. The main desk then prepares the invoiceand sends them to the clients. Clients have one day to pay the invoice. Sales volume can vary from one quarter to the next. In terms of expenses, the main expense for MCs relates to labour. They pay crew members competitivewages and benefits. The wage rate is calculated on an hourly basis and is fixed for the entire year. The next expense item is cleaning supplies. MCS accounts for cleaning supplies relative to the hours worked. For example, they estimate that cleaning supplies are consumed at a rate of 0.2 litres per labour hour. This is a good measure because the longer it takes for a site to be cleaned, the more the consumption of cleaning supplies. Cleaning supplies are procured from a prominent vendor and the cost is fixed for the entire year. Sometimes clients are not happy about the cleaning services and register a complaint. In that case, the crew is dispatched again for a second cleaning. The hours accruing from such scenarios are not billed to the client as this constitutes a 'service recovery'. However, the crew is paid for such hours. Mcs maintains arecord of these hours and classifies them as 'unproductive hours', or 'unbilled hours. This is calculated as a percentage of revenue earning hours (e.g., 10% of revenue generating hours). For the purpose of this assignment, assume that there is no consumption of cleaning materials when this second cleaning is being done. Budget for the year 2021: The budget for the year 2021 was prepared in December 2020 and had the following components: Revenue: The revenue is calculated as number of hours that the crew works on a site, multiplied by the contracted rate with the client. The hours worked in the residential and commercial segments are shown separately, and there is a total for the combined hours worked. The revenue for each segment is arrived at by multiplying the hours for the segment by the rate. The budget is prepared for four quarters, one to four. For 2021, the budgeted sales hours were: 2 3 4 4,200 4,000 3,500 Quarter 1 Budgeted commercial sales in 4,000 hours Budgeted residential sales in hours 2,100 2,100 1,800 2,100 For 2021, the budgeted selling price per hours were: 1 2 3 4 Quarter Selling price per hour (commercial) Selling price per hour (residential) $39 $39 $39 $39 $42 $42 $42 $42 Direct Labour expense: MCS will pay its employees an hourly rate of $26 for the entire year. Cleaning supply usage: The budgeted usage is 0.28 litre / labour hour for the commercial segment and 0.17 litre/ labour hour for the residential segment. This is constant for the entire year. Cleaning supply expense: Budgeted expense is $5.70 per litre for the entire year. 4 Page Fixed overhead: To support the cleaning operations, there are four items of expenditure. These are designated as overheads and their budgeted expenses are as follows: General Administration related: Budgeted expense is $6,000 per quarter and is the same for all four quarters. Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Budgeted expense is $8,700 per quarter and is the same for all four quarters. Employee benefit related: Budgeted expenditure on gas is $6,000 and is the same for all four quarters. Maintenance: Budgeted expenditure on Maintenance related is $1,200 per quarter and is the same for all four quarters. Actual results for the year 2021. It is now January 7, 2022, and Moonlight Clean Services (MCS) is comparing the actual expenses against the budget. Here is what they found. Revenue: For 2021, the actual sales hours were: 1 2 3 4 Quarter Actual sales - commercial Actual sales - residential 3,700 4,300 3,900 3,900 2,250 2,350 1,800 2,000 For 2021, the actual hourly revenue was: 1 2 3 4 Quarter Actual selling price-commercial Actual selling price - residential $38 $38 $38 $46 $38 $46 $46 $46 5 Page Direct Labour expense: MCS paid its employees an hourly rate of $28 for the entire year. Cleaning supply usage: The actual usage was 0.27 litre / labour hour for the commercial segment and 0.15 litre/ labour hour for the residential segment. This was constant for the entire year. W Cleaning supply expense: Actual expense was $5.65 per liter for the entire year. Fixed overhead: To support the cleaning operations, there are four items of expenditure. These are designated as overheads and their budgeted expenses are as follows: General Administration related: Actual expense per quarter was as follows: Quarter 1 2 3 4 Amount 6,200 6,400 5,900 5,800 Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Actual expense was $8,500 per quarter and was the same for all four quarters. Employee benefit related: Actual expense per quarter was as follows: Quarter Amount 8,300 7,800 8,100 8,300 1 2 3 4 1 2 3 4 1,300 Maintenance: Actual expense per quarter was as follows: Quarter Amount 1,000 1,200 1,000 Unproductive (unbilled) factor: Cleaning crews had to work 14% over the revenue generating hours to attend to complaints and do a second cleaning. These hours were not billable to clients, but Moonlight Clean Services (MCS) would paythe employees for this time they worked. For the purpose of this assignment, assume that there is no consumption of cleaning materials when this second cleaning was done. Required: Part A: For this part you will use the template provided in Excel Workbook format. Complete the following steps in sequence: Step # One Two Three Four Five Spreadsheet title Activity Input Database Populate the section A4:G24 with data from the above case and develop the budget parameters. Input Database Populate the section K4:035 with data from the above case and develop the actual parameters. Static Budget Populate the section A7:F29 with data from the spreadsheet 'Input Database' and develop the static budget. Actual Budget Populate the section A7:F29 with data from the spreadsheet 'Input Database' and develop the actual budget. Flexible Budget Populate the section A7:F29 with data from the spreadsheet 'Input Database' and develop the flexible budget. Var Analysis - Static and Populate the section A5:E26 with data from the Flex spreadsheets 'Static Budget' and 'Actual Budget' and develop the static budget variance. Var Analysis - Static and Populate the section G5:326 with data from the Flex spreadsheet 'Actual Budget' and 'Flexible Budget' and develop the flexible budget variance. Material variances Using applicable data complete the analysis of Material variances for both the commercial and residential segments. Labour variances Using applicable data complete the analysis of Material variances for both the commercial and residential segments. Six Seven Eight Nine MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT-W22 Other guidelines: Data should be entered in the 'Input Database' spreadsheet only. For all other spreadsheets, you must use cell references, linking data from 'Input Database' or other spreadsheets. Do not enter data or calculations without cell references. To calculate variances, you need to use 'IF' formula. Part B: In week 10, your Professor will be discussing about ethical practices during budget preparation. One such practice involves use of budgetary slack'. Reflecting on this learning experience, you will write a memo to the CEO of MCS. The CEO is concerned regarding ethical practices and needs your advice. In your role as a consultant, write a memo explaining what unethical practices can budget preparers incorporate during budget preparation. This should be in your own words and no external research or references are needed. Structure of the memo: Word limit: 300 words maximum (penalty for going over this limit) Arial or Calibri font Memo format As MS Word document (any other format will receive a zero mark) Memo will be verified through Turnitin. Deliverables: Completed Excel workbook. Memo in MS Word format Delivery: Upload both the items to the assigned folder in eConestoga. Your Professor will advise you as to the due date of this assignment. Marking Key and Rubric: Included within the Excel workbook. Please review all items in the marking key before submission and ensure they are complete. 81 Page G56 X fic A . 1 j L M N P R S T V X Y z AA AB AC AD AE AF AG AH AL 1 B c D E (Company name) Operating Budget for the period Jan - Dec '21 Quarters 3 1 2 4 Year Marks 2 2 2 3 4 5 A 7 Sales budget 8 Sales Commercial 9 Sales residential 10 Total sales 11 12 13 Direct material budget 14 Variable costs commercial 15 Variable costs residential 16 Total variable costs 17 18 19 Labour budget 20 Commercial 21 Residential 22 Total labour 23 24 Fixed Overhead: 25 Receptionist 26 Depreciation 27 Gas 28 Maintenance 29 Total 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 Total 8 Cover page Read this first Static Budget Actual Budget Flexible Budget Var Analysis - Static and Flex Material variances Labour variances Input Database + Ready HI E 59%