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Overview: In this assignment, you are provided with a case which includes data relating to static budget, flexible budget, and variance analysis. You will transcribe the data from the case and create a: - Static budget - Actual budget - Flexible budget - Static budget variance - Flexible budget variance - Variance analysis You will also write a memo regarding participative budget process. Grading: This is an individual assignment worth 20% of your final grade. Related textbook content: The content you are being assessed on, appears in Chapter 7 and Chapter 11 of the textbook. This content is covered in class during weeks 10,11 and 12. 2 IP age MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT - 22F CASE Background: Danube Cleaning Services (DCS) 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 DCS. As the contractor, DCS dispatches its crew to the locations. The crew performs the cleaning as per the contracts and reports back to the company main desk. The main desk then prepares the invoice and 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 DCS relates to labour. They pay crew members competitive wages 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. DCS 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. DCS maintains a record 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 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 2021 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: For 2021 , the budgeted selling price per hours were: Direct Labour expense: DCS will pay its employees an hourly rate of $28 for the entire year. Cleaning supply usage: The budgeted usage is 0.39 litre / labour hour for the commercial segment and 0.28 litre/ labour hour for the residential segment. This is constant for each quarter of the entire year. Cleaning supply expense: Budgeted expense is $5.90 per litre for the entire year. 4 IP age MGMT 8500 -ASSIGNMENT 3: BUDGET ASSIGNMENT-22F 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: Receptionist: Budgeted expense is $8,500 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 $7,300 per quarter and is the same for all four quarters. Employee benefit related: Budgeted expenditure on gas is $6,800 and is the same for all four quarters. Maintenance: Budgeted expenditure on Maintenance related is $3,700 per quarter and is the same for all four quarters. Actual results for the year 2021. It is now January 7, 2022, and Danube Clean Services (DCS) is comparing the actual expenses against their budget. Here is what they found. MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT - S22 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 identify calculated variances as favourable (F) or unfavourable (U) you need to use 'IF' formula. Part B: - Refer to Week 10 slide deck, in class version. Refer to slide 87 which discusses advantages and disadvantages of a participative budget system. - Currently DCS is not following a participative budget system. Would you recommend the above model to the CEO as is relates to preparing the budget for DCS? Discuss your recommendation in a memo to the CEO. This should be in your own words and no external research or references are needed. - Structure of the memo: - Word limit: 500 words maximum (penalty for going over this limit) - Arial or Calibri font with 12 point and double space - 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. 8|Page Budgeted expenditure on Maintenance related is $3,700 per quarter and is the same for all four quarters. Actual results for the year 2021. It is now January 7, 2022, and Danube Clean Services (DCS) is comparing the actual expenses against their budget. Here is what they found. Revenue: For 2021 , the actual sales hours were: For 2021 , the actual hourly revenue was: 5 | Page MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT - 22F Direct Labour expense: DCS paid its employees an hourly rate of $28 in each quarter of the entire year. Cleaning supply usage: The actual usage was 0.35 litre / labour hour for the commercial segment and 0.32 litre/ labour hour for the residential segment. This was constant for the entire year. Cleaning supply expense: Actual expense was $6.15 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: Receptionist: Artual exnense ner nularter was as follows: Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Actual expense was $7,500 per quarter and was the same for all four quarters. Employee benefit related: Maintenance: Artual exnence ner nuarter was as follows: Cleaning crews had to work 11% over the revenue generating hours to address complaints and do a second cleaning. These hours were not billable to clients, but Danube Clean Services (DCS) would pay the employees for this time they worked. For 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: Page MGMT 8500-ASSIGNMENT 3: BUDGET ASSIGNMENT-S22 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 identify calculated variances as favourable (F) or unfavourable (U) you need to use 'IF' formula. Part B: - Refer to Week 10 slide deck, in class version. Refer to slide 87 which discusses advantages and disadvantages of a participative budget system. - Currently DCS is not following a participative budget system. Would you recommend the above model to the CEO as is relates to preparing the budget for DCS? Discuss your recommendation in a memo to the CEO. This should be in your own words and no external research or references are needed. - Structure of the memo: - Word limit: 500 words maximum (penalty for going over this limit) - Arial or Calibri font with 12 point and double space - Memo format 3 Edit variances Labour variances Input Database Rubric Edit 3 Overview: In this assignment, you are provided with a case which includes data relating to static budget, flexible budget, and variance analysis. You will transcribe the data from the case and create a: - Static budget - Actual budget - Flexible budget - Static budget variance - Flexible budget variance - Variance analysis You will also write a memo regarding participative budget process. Grading: This is an individual assignment worth 20% of your final grade. Related textbook content: The content you are being assessed on, appears in Chapter 7 and Chapter 11 of the textbook. This content is covered in class during weeks 10,11 and 12. 2 IP age MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT - 22F CASE Background: Danube Cleaning Services (DCS) 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 DCS. As the contractor, DCS dispatches its crew to the locations. The crew performs the cleaning as per the contracts and reports back to the company main desk. The main desk then prepares the invoice and 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 DCS relates to labour. They pay crew members competitive wages 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. DCS 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. DCS maintains a record 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 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 2021 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: For 2021 , the budgeted selling price per hours were: Direct Labour expense: DCS will pay its employees an hourly rate of $28 for the entire year. Cleaning supply usage: The budgeted usage is 0.39 litre / labour hour for the commercial segment and 0.28 litre/ labour hour for the residential segment. This is constant for each quarter of the entire year. Cleaning supply expense: Budgeted expense is $5.90 per litre for the entire year. 4 IP age MGMT 8500 -ASSIGNMENT 3: BUDGET ASSIGNMENT-22F 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: Receptionist: Budgeted expense is $8,500 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 $7,300 per quarter and is the same for all four quarters. Employee benefit related: Budgeted expenditure on gas is $6,800 and is the same for all four quarters. Maintenance: Budgeted expenditure on Maintenance related is $3,700 per quarter and is the same for all four quarters. Actual results for the year 2021. It is now January 7, 2022, and Danube Clean Services (DCS) is comparing the actual expenses against their budget. Here is what they found. MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT - S22 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 identify calculated variances as favourable (F) or unfavourable (U) you need to use 'IF' formula. Part B: - Refer to Week 10 slide deck, in class version. Refer to slide 87 which discusses advantages and disadvantages of a participative budget system. - Currently DCS is not following a participative budget system. Would you recommend the above model to the CEO as is relates to preparing the budget for DCS? Discuss your recommendation in a memo to the CEO. This should be in your own words and no external research or references are needed. - Structure of the memo: - Word limit: 500 words maximum (penalty for going over this limit) - Arial or Calibri font with 12 point and double space - 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. 8|Page Budgeted expenditure on Maintenance related is $3,700 per quarter and is the same for all four quarters. Actual results for the year 2021. It is now January 7, 2022, and Danube Clean Services (DCS) is comparing the actual expenses against their budget. Here is what they found. Revenue: For 2021 , the actual sales hours were: For 2021 , the actual hourly revenue was: 5 | Page MGMT 8500 - ASSIGNMENT 3: BUDGET ASSIGNMENT - 22F Direct Labour expense: DCS paid its employees an hourly rate of $28 in each quarter of the entire year. Cleaning supply usage: The actual usage was 0.35 litre / labour hour for the commercial segment and 0.32 litre/ labour hour for the residential segment. This was constant for the entire year. Cleaning supply expense: Actual expense was $6.15 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: Receptionist: Artual exnense ner nularter was as follows: Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Actual expense was $7,500 per quarter and was the same for all four quarters. Employee benefit related: Maintenance: Artual exnence ner nuarter was as follows: Cleaning crews had to work 11% over the revenue generating hours to address complaints and do a second cleaning. These hours were not billable to clients, but Danube Clean Services (DCS) would pay the employees for this time they worked. For 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: Page MGMT 8500-ASSIGNMENT 3: BUDGET ASSIGNMENT-S22 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 identify calculated variances as favourable (F) or unfavourable (U) you need to use 'IF' formula. Part B: - Refer to Week 10 slide deck, in class version. Refer to slide 87 which discusses advantages and disadvantages of a participative budget system. - Currently DCS is not following a participative budget system. Would you recommend the above model to the CEO as is relates to preparing the budget for DCS? Discuss your recommendation in a memo to the CEO. This should be in your own words and no external research or references are needed. - Structure of the memo: - Word limit: 500 words maximum (penalty for going over this limit) - Arial or Calibri font with 12 point and double space - Memo format 3 Edit variances Labour variances Input Database Rubric Edit 3