Chapter 9 Assignment i Saved Problem 9-25 Applying the Flexible Budget Approach (LO3, LO4] 15 points The Centrico Medical Laboratory, a government-sponsored charity, is located on the island of Ste. Lucretia. The laboratory has just finished its operations for September, which was a particularly busy month due to a chemical spill that affected a few neighbouring small islands, causing many illnesses. The chemical spill and contamination largely bypassed Ste. Lucretia's water supply, but residents of Ste. Lucretia willingly donated supplies and the laboratory assisted in the medical testing to help people on other islands. As a consequence, the medical laboratory collected and processed over 25% more laboratory samples from potentially ill residents than had been originally planned for the month. A report prepared by a government official comparing actual costs to costs included in the static budget for the medical laboratory appears below. (The currency in Ste. Lucretia is the East Caribbean dollar.) Continued support from the government depends on the lab's ability to demonstrate control over its costs: eBook Ask Print CENTRICO MEDICAL LABORATORY Cost Control Report For the Month Ended September 30 Static Budget Variance 220.00 Static Budget 730.00 Actual 950.00 Laboratory samples collected Variable costs: Medical supplies Lab tests Refreshments for staff and volunteers Administrative supplies $15,435.00 16,863.00 1,980.00 397.00 $11,169.00 13,578.00 1,606.00 584.00 $4,266.00 3,285.00 374.00 (187.00) Total variable cost 34,675.00 26,937.00 7,738.00 Fixed costs: Staff salaries Equipment depreciation Rent Utilities 306.00 20,100.00 3,186.00 2,400.00 504.00 20,100.00 2,880.00 2,400.00 465.00 39.00 Chapter 9 Assignment i Saved Helps CENTRICO MEDICAL LABORATORY Cost Control Report For the Month Ended September 30 Static Budget Variance 220.00 Static Budget 730.00 Actual 950.00 Laboratory samples collected 15 points Variable costs: Medical supplies Lab tests Refreshments for staff and volunteers Administrative supplies $15,435.00 16,863.00 1,980.00 397.00 $11,169.00 13,578.00 1,606.00 584.00 $4,266.00 3,285.00 374.00 (187.00) eBook Ask Total variable cost 34,675.00 26,937.00 7,738.00 Print Fixed costs: Staff salaries Equipment depreciation Rent Utilities 20,100.00 3,186.00 2,400.00 504.00 20,100.00 2,880.00 2,400.00 465.00 306.00 39.00 Total fixed cost 26,190.00 25,845.00 345.00 Total cost $60,865.00 $52,782.00 $8,083.00 The managing director of the medical laboratory is very unhappy with this report, claiming that his costs were higher than expected due to the emergency on the neighbouring islands. He also points out that the additional costs were fully covered by payments from grateful recipients on the other islands. The government official who prepared the report counters that all of the figures were submitted by the medical laboratory to the government; he was just pointing out that actual costs were considerably higher than promised in the budget. Denuired. Chapter 9 Assignment i Saved Help Required: 1. Prepare a new performance report for September using the flexible budget approach. (Note: Even though there are no revenues in this setting, the flexible budget approach can still be used to prepare a flexible budget performance report. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.) 15 points Centrico Medical Laboratory Flexible Budget Performance Report For the Month Ended September 30 eBook Ask Costs Cost Formula (per unit) Actual Costs Incurred for 950 Lab samples Flexible Budget Based on 950 Lab samples Flexible Budget Variance Print Variable costs: Medical supplies Lab tests Refreshments for staff and volunteers $ 0.00 0.00 0.00 Administrative supplies Total variable cost Fixed costs: Staff salaries Equipment depreciation Rent Utilities Total fixed cost Total cost $ 0.00 0.00 $ 0.00 0.00 Chapter 9 Assignment A Saved Problem 9-15 Direct Materials Purchases and Direct Labour Budgets (LO2] The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 15 points 1st Quarter 5,500 2nd Quarter 8,500 3rd Quarter 7,500 4th Quarter 6,500 Units to be produced eBook In addition, 6,500 grams of raw materials inventory is on hand at the start of the 1st quarter and the beginning accounts payable for the 1st quarter is $3,380. Ask Print Each unit requires 8.50 grams of raw material that costs $1.60 per gram. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the 4th quarter is 8,500 grams. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.40 direct labour-hours and direct labourers are paid $10.50 per hour. Chapter 9 Assignment A Saved Required: 1. Prepare the company's direct materials purchases budget and schedule of expected cash disbursements for materials for the upcoming fiscal year. Zan Corporation Direct Materials Budget 1st Quarter 2nd Quarter 15 3rd Quarter 4th Quarter Year points Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production eBook 0 0 0 0 0 Ask Print Total units of raw materials needed 0 0 0 0 0 1 0 0 0 0 0 Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased $ 0 % 0 % 0 % 0 % 0 Schedule of Expected Cash Disbursements for Materials Beginning accounts payable 1st Quarter purchases 2nd Quarter purchases 3rd Quarter purchases | Ath Quarter nurchacac Chapter 9 Assignment i Saved Schedule of Expected Cash Disbursements for Materials Beginning accounts payable 1st Quarter purchases 2nd Quarter purchases 3rd Quarter purchases 4th Quarter purchases Total cash disbursements for materials | $ 0 % 0 % 0 % 15 points 0 % 0 eBook Ask Print 2. Prepare the company's direct labour budget for the upcoming fiscal year, assuming that the direct labour workforce is adjusted each quarter to match the number of hours required to produce the forecast number of units produced. Year! Zan Corporation Direct Labour Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Required production in units Direct labour-hours per unit Total direct labour-hours needed0 0 0 0 Direct labour cost per hour Total direct labour cost $ 0 $ 0 $ 0 $ 0 0 $ 0