MGMT 8500: BUDGET ASSIGNMENT - S21 MGMT 8500 BUDGET ASSIGNMENT-521 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: CASE Static budget Actual budget Flexible budget Static budget variance Flexible budget variance Variance analysis Background: Super Clean is local business in the Tri-cities area. It provides cleaning services to residential households . and commercial establishments. Both households and businesses sign contracts with Super Clean. As the contract, Super Clean dispatches its crew to the locations. The crew performs the clearing as per the contracts and reports back to the company main desk. The main desk then prepares the invoice and sends them to the dients. Clients have one day to pay the invoice, Sales volume can vary from one quarter to the next. You will also write a memo regarding ethical conduct durire budget preparation and how building in slack' represents unethical behaviour In terms of expenses, the main expense for Super Clean relates to labour. They pay crew members competitive wages and benefits. The wage rate is calculated on an hourly basis and are fixed for the entire year. Grading: This is an individual assignment worth 20% of your final grace. Related textbook content: The next expense Item is cleaning supplies, Super Clean accounts for cleaning supplies relative to the hours worked. For example, they estimate that cleaning supplies are consumed at a rate measured in litres per labour hour. This is a good measure because the larger it takes for a site to be cleaned, more will be the consumption of cleaning supplies. Cleaning Supplies are procured from a prominent vendar and the cost is fixed for the entire year. The content you are being assessed on, appears in Chapter 7 and Chapter 11 of the textbook. This content is covered in class during works 9,10 and 11. Sometimes dients are not happy about the cleaning services and register a complaint. In that case crew is dispatched again for a second cleaning. The hours accruing from such scenarios are rot billed to the clean as this constitutes a 'service recovery. However, the crew is peid for sucht hours. Super Clean maintains a record of these hours and classifies them as 'unproductive hours', or 'uribilled hours. This is calculated as a percentage of revenue earning hours le... 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 . 3 Page 4 Page MGMT 8500: BUDGET ASSIGNMENT - $21 MGMT 8500 BUDGET ASSIGNMENT - S21 Cleaning supply expense: Budgeted expense is $5,40 per liter for the entire year Budget for the year 2020: Fixed overhead: In order to support the cleaning operations, there are four items of expenditure. These are designated as overheads and their budgeted expenses are as follows: The budget for the year 2020 was prepared in December 2013 and had the following components: Receptionist: Budgeted coense is $ 5500 per quarter and is the same for all the four quarters. Revenue: The revenue is calculated as number of hours which the crew works on a site, times the contracted rate with the client. The hours worked in the residential and commercial segments are shawn separately, and there is total for the combined hours worked. The revenue for cach segment is arrived at by multiplying the hours for the segment times the rate. The budget is prepared for four quarters, aneto Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations, Budgeted expense is $ 9 200 per quarter and is the same for all the four quarters. four Gas: For the first quarter of 2020, the budgeted sales hours and hourly revenue were: Budgeted expenditure on gas is $ 6000 and is the same for all the four quarters. Item 2 900 Office Supplies Budgeted expenditure on Office Supplies is $ 750 per quarter and is the same for all the four quarters. 1 50X Dudgeted sales (commerciall, in hours Hungated sales residentiall, in hours Budgeted selling rate (commercial), per hour Budgeted selling rate (residential), per hour $ 40 Actual results for the year 2020. $ 55 It is now January 7, 2021 and Super Clean is comparing the actual expenses against their budget. Here is what they found. For quarters two, three and four it was projected that Revenue For the first quarter of 2020, the actual sales hours and hourly revenue were: Hudgeted sales in hours for both commercial and residential with increase at the rate of 4% on a quarter over Quarter basis. . Buceeted selling rate will increase at 5% on a quarter over quarter basis for the commercial segment and GX on a quarter over quarter basis for the residential segment Item 3000 1 500 Direct Labour expense: Super Clean will pay its employees an hourly rate of $ 22 for the entire year. Actual sales (commercial), in hours Actual sales (residential), in hours Actual selling rate commerciali, per hour Actual selling rate residential, per hour $ 45 $ 55 Cleaning supply usage: The budgeted usage is 0.25 litre / labour hour for commercial segment and 6.13 litre/ labour hour for residential segment. This is constant for the entire year. For Quarters two, three and four it was noticed that: 5 Page 6 Page MGMT 8500 BUDGET ASSIGNMENT - $21 MGMT 8500 BUDGET ASSIGNMENT - S21 Commercial: Actual sales recorded a 3% Increase in Q2 over Q1, Q3 was 4% higher than 02. was 5% higher than a Unproductive (unbilled) factor: Cleaning crews had to work 12% over the revenue generating hours to attend to complaints and do a second cleaning. These hours were not bilable to clients, but Super Clean would pay the 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. Residential Actual sales recorded a 3% increase in Q2 over Q1 Q3 was 4% higher than 2.4 was 5% higher than 23. Required: Part A Direct Labour expense: Super dean paid its employees an hourly rate of $ 20 for the entire year. For this part you will use the template provided in Excel Workbook format. Complete the following steps in sequence: Step # Cleaning supply usage: The actual usage was 0.22 litre / labour hour for commercial segment and 0.10 litro/ labour hour for residential segment. This is constant for the entire year. One Two Three Cleaning supply expense Actual cxpcnse was $5.60 per liter for the entire year. . Fixed overhead: In order to support the cleaning operations, there are four items of expenditure. These are designated as overheads and their budgeted expenses are as follows: Four Receptionist: Actual expense was $ 5 300 per quarter and is the same for all the four quarters Spreadsheet title Activity Input Databese Populate the section M:624 with data from the above case and develop the budget parameters. Input Database Papulate the section K4:035 with data from the above case and develop the actual parameters. Static Budget Papulate the section 47:F29 with data from the spreadsheet 'Input Database' and develop the static buciget. Actual Bucset Populate the section A7F29 with data from the spreadsheet 'Input Database' and develop the actual budget. Flexible Budget Populate the section A7F29 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 G5:26 with data from the Flex spreadsheet 'Actual Budget' and 'Flexible Budget and develop the flexible budget variance Fine Five Depreciation: This relates to the depreciation of vehicles used to transport employees to dient locations. Actual expense was $ 9 400 per quarter and was the saine for all the four Quarters. Shy Gas Actual expenditure on gas was $ 7 200 and was the same for all the four quarters, Seven Office Supplies: Actual expenditure on Office Supalies was $ 1 300 per quarter and was the same for all the four quarters. 7 Page | & Page MGMT 8500 BUDGET ASSIGNMENT - $21 MGMT 8500 BUDGET ASSIGNMENT - 521 Eight Material variances Deliverables: using applicable data complete the analysis of Material variances for both the commercial and Completed Freel workbook. Merno in MS Word format Ninc Labour variances residential segments. using applicable data complete the analysis of Material variances for both the commercial and residential reginents. Delivery: Upload both the items to the assigned folder in eConestoga. Your Professor will advice you as to the due date of this assignment. Other guidelines: Data should be entered in the input Database' spreadsheet only, For all other spreadsheets, you have to 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 'Il Formula. Marking Key and Rubric: Included within the Excel workbook. Please review all items in the marking key before submission and ensure they are complete Part 3 . In week 4, 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 SUPER CLEAN. The CFO is concerned regarding ethical practices and needs your advice. In your role as a consultant, write a memo explaining What 'budgetary slack' is? Possible budgetary items where budgetary slack can be applied?' If you consider 'budgetary slack' as ethical or unethical? Give reasons. Structure of the memo Word limit: 300 words maximum Arial or Calibri font Memo format As MS Word docurrent Memo will be verifice through Turnitin 9 Page 10 Page AutoSave OFF OFF A A&E" S21- Budget Assignment - Student(1) Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibrl (Body) v 11 v A A X [G Wrap Text Custom Insert v ' . , Delete Paste BIU dy Av YA = = = -- Y Merge & Centre EB Sensitivity % ! Y Conditional Format Cell Formatting es Table Styles # Format Sort & Filter Find & Select Analyse Data C26 A B F G H I J K L M N 0 P 1 2 D E SUPER CLEAN Operating Budget for the period Jan-Dec '18 3 4 Quarters 3 5 1 2 4. Year Marks 2 2 6 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 Office Supplies 29 Total 30 31 2 2 Total 32 Cover page Read this first Static Budget Actual Budget Flexible Budget Var Analysis - Slalo and Flex Material variances Labour variances Inpul Database Rubrio + Ready 2 + 130% AutoSave OFF OFF A A& S21- Budget Assignment - Student(1) Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibrl (Body) v 11 v A A X [G Wrap Text Custom Insert v ' . , Delete Paste BIU dy Av = = = -- Y Merge & Centre , % ! Sensitivity Conditional Format Cell Formatting es Table Styles # Format Sort & Filter Find & Select Analyse Data C27 A B F G H I J K L M N 0 P 1 2 D E SUPER CLEAN Operating results for the period Jan-Dec '18 3 4 Quarters 3 5 1 2 4. Year Marks 2 2 6 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 Office Supplies 29 Total 30 31 2 2 Total 8 32 Cover page Read this first Slalic Budget Actual Budget Flexible Budget Var Analysis - Slalo and Flex Material variances Labour variances Inpul Database Rubrio + Ready 2 + 130% AutoSave OFF OFF A ASF S21- Budget Assignment - Student(1) Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibrl (Body) v 11 v A A X [G Wrap Text Custom Insert v ' . , v Delete Paste BIU dy Av = = = -- Y Merge & Centre , % ! Sensitivity Conditional Format Cell Formatting es Table Styles # Format Sort & Filter Find & Select Analyse Data C15 A B F G H I J K L M N 0 P 1 2 D E SUPER CLEAN Flexible budget for the period Jan-Dec '18 3 4 Quarters 3 5 1 2 4. Year Marks 2 2 6 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 Office Supplies 29 Total 30 31 2 2 Total 8 32 Cover page Read this first Slatie Budget Actual Budget Flexible Budget Var Analysis - Slalia and Flex Material variances Labour variances Rubric + Inpul Dalabas 2 Ready + 130% AutoSave OFF OFF A A&E" S21- Budget Assignment - Student(1) Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibrl (Body) v 11 v A A X G ab Wrap Text Custom 2 Insert v ' . , v Delete Paste 1 U v Y dy Av = = = Merge & Centre EB% Conditional Format Cell Formatting as Table Styles Sensitivity Sorte Filter Format v Find & Select Analyse Data C23 X fx A B F G H T K L M N 1 C E Super Clean Inc Static Budget Variance Static for the year Varianco U/E Marks Actual for the war Flexible Budget Variance Flexible for the year Variance Actual for the year U/F 2 3 4 Sales budget 5 Sales Commercial 6 Sales residential 7 Total sales F 1 1 1 1 1 1 1 1 1 8 9 10 Direct material budget 11 Variable costs commercial 12 Variable costs residential 13 Total variable costs 14 15 16 Labour budget 17 Commercial 18 Residential 19 Total labour 20 21 Fixed Overhead: 22 Receptionist 23 Depreciation 24 Gas 25 Office Supplies 26 Total 27 28 29 30 31 32 Cover page Read this first Ready 1 1 1 1 Total Slatie Budget Actual Budget Flexible Budget Var Analysis - Static and Flex Material variances Labour variances Rubric + Inpul Database 2 + 130% AutoSave IF ABPC .. S21- Budget Assignment - Student (1) View Tell me Home Insert Draw Page Layout Formulas Data Review Share Comments Calibrl (Body) v 11 v A A X G ab Wrap Text Custom Insert v ' , v Delete V Paste BIU ar Ar = = = -- Y Merge & Centre EB Sensitivity % ! Y Conditional Format Cell Formatting es Table Styles # Format Sort & Filter Find & Select Analyse Data V 17 fx A C D E G J K L M N 0 P R 5 5 UJ V W Direct Materials - Commercial Marks 1 2 3 Actual Quantity 10 4 Actual Rate 5 Tall Actual Quantity 4 Standard Hate SR To al Standard Quantity sa Standard Hate SR Total 3 Price Variante Quantity Variance 7 8 Total Variance 1 Direct Materials. Residential 1 Actual Quantity-AD Standard Rato SR Total Standard Quantity-SQ Standard Rate-SR Total 10 11 12 Explanation for Quantity variance: 13 14 15 Explanation for price variance: 16 17 12 19 20 21 22 Actual.antity 10 23 Actual Rate AR 24 Totd 25 26 Price Variance 27 28 29 30 31 32 33 Explanation for Quantitylance: 34 35 36 Explanation for price variance: 37 38 39 40 Quantity Variance 2 Total Variance 1 1 Total 16 42 43 14 Cover page Read this first Slatie Budget Actual Budget Flexible Budget Var Analysis - Slatia and Flex Material variances Labour variances Input Database Rubric + Ready + 100% AutoSave IF ABPC .. S21- Budget Assignment - Student (1) View Tell me Home Insert Draw Page Layout Formulas Data Review Share Comments Calibrl (Body) v 11 v A A X G ab Wrap Text Custom Insert v ' , v Delete V Paste BIU ar Ar = = = -- Y Merge & Centre EB Sensitivity % ! Y Conditional Format Cell Formatting es Table Styles # Format Sort & Filter Find & Select Analyse Data V 17 fx A C D E G J K L M N 0 P R 5 5 UJ V W Direct Materials - Commercial Marks 1 2 3 Actual Quantity 10 4 Actual Rate 5 Tall Actual Quantity 4 Standard Hate SR To al Standard Quantity sa Standard Hate SR Total 3 Price Variante Quantity Variance 7 8 Total Variance 1 Direct Materials. Residential 1 Actual Quantity-AD Standard Rato SR Total Standard Quantity-SQ Standard Rate-SR Total 10 11 12 Explanation for Quantity variance: 13 14 15 Explanation for price variance: 16 17 12 19 20 21 22 Actual.antity 10 23 Actual Rate AR 24 Totd 25 26 Price Variance 27 28 29 30 31 32 33 Explanation for Quantitylance: 34 35 36 Explanation for price variance: 37 38 39 40 Quantity Variance 2 Total Variance 1 1 Total 16 42 43 14 Cover page Read this first Slatie Budget Actual Budget Flexible Budget Var Analysis - Slatia and Flex Material variances Labour variances Input Database Rubric + Ready + 100% AutoSava OFF ABPC .. S21- Budget Assignment - Student (1) View Tell me Home Insert Draw Page Layout Formulas Data Review Share Comments Calibrl (Body) v 11 v A A X G Wrap Text Custom Insert v HU Y , v Delete v Paste B 1 ~ Ar Y Merge & Centre EB% Sensitivity Conditional Format Cell Formatting es Table Styles Format v Sort & Filter Find & Select Analyse Data K12 fy F G I M N 0 P a S T U V W 1 Parametersbudget Parameters Quar quam 2 3