Questions are as follows:

Q.1 Static Budget

	(Company name)
	Operating Budget for the period Jan - Dec '21
	Quarters
	1	2	3	4	Year
Sales budget
Sales Commercial
Sales residential
Total sales
Direct material budget
Variable costs commercial
Variable costs residential
Total variable costs
Labour budget
Commercial
Residential
Total labour
Fixed Overhead:
Receptionist
Depreciation
Gas
Maintenance
Total

CASE Background: Cosmos Cleaning Services (CCS) 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 CCS. As the contractor, CCS 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 CCS 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. CCS 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. CCS 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: Quarter 1 2 3 4 Budgeted commercial sales in 2,900 3,000 2,600 2,400 hours Budgeted residential sales in hours 2,400 2,000 1,800 2,400 For 2021, the budgeted selling price per hours were: Quarter 1 2 3 4 Selling price per hour (commercial) $49 $49 $49 $49 Selling price per hour (residential) $53 $53 $53 $53 Direct Labour expense: CCS will pay its employees an hourly rate of $29 for the entire year. Cleaning supply usage: The budgeted usage is 0.28 litre / labour hour for the commercial segment and 0.24 litre/ labour hour for the residential segment. This is constant for the entire year. Cleaning supply expense: Budgeted expense is $6.05 per litre 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 admin related: Budgeted expense is $6,100 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 $8,200 per quarter and is the same for all four quarters. Covid related: Budgeted expenditure on covid related overhead is $7,900 and is the same for all four quarters. Employee Benefit related: Budgeted expenditure on employee benefit related overhead 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 Cosmos Clean Services (CCS) is comparing the actual expenses against their budget. Here is what they found. Revenue: For 2021, the actual sales hours were: Quarter 1 2 3 4 Actual sales - commercial 2,700 3,200 2,300 2,600 Actual sales - residential 2,500 2,100 2,000 2,500 For 2021, the actual hourly revenue was: Quarter 1 2 3 4 Actual selling price-commercial $47 $47 $47 $47 Actual selling price - residential $51 $51 $51 $51 Direct Labour expense: CCS paid its employees an hourly rate of $30 for the entire year. Cleaning supply usage: The actual usage was 0.30litre / labour hour for the commercial segment and 0.26 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: General admin related: Actual expense per quarter was as follows: Quarter 1 2 3 4 Amount 6,000 6,100 5,900 6,300 Depreciation: This relates to the depreciation of vehicles used to transport employees to client locations. Actual expense was $8,100 per quarter and was the same for all four quarters. Covid related: Actual expense per quarter was as follows: Quarter 1 2 3 4 Amount 7,500 7,100 7,600 7,600 Employee benefit related: Actual expense per quarter was as follows: Quarter 1 2 3 4 3,600 3,500 3,900 Amount 4,000 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 billable to clients, but Cosmos Clean Services (CCS) 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