Question $4$

Happy Flash Detailing $($HFD$)$ is a small business providing car detailing services including inspecting, washing, buffing, waxing, vacuuming, steaming, and deodorising. The company was established $10$ years ago. HFD has two experienced car detailers who are good friends of the owner and have been with the company since the first day of operations.

HFD consumes supplies during the process of rendering the detailing service. The budgeted average cost of supplies is $\backslash (\backslash$$ $4\mathrm{.}5\backslash )$ per car detailed. HFD purchases all supplies from a local supplier on credit, with $\backslash (60\backslash \%\backslash )$ of purchases paid during the month of the purchase, $\backslash (30\backslash \%\backslash )$ paid in the month following the purchase, and the remained $\backslash (10\backslash \%\backslash )$ paid in the second month

following the purchase. To avoid stockout of supplies, HFD carries supplies at a level of $\backslash (20\backslash \%\backslash )$ of next month's budgeted usage at the end of each month. The budgeted numbers of cars detailed in the first half year of $20$ X $3$ are as below:

To evaluate its operating performance in May $20$X$3,$ HFD collected data from its static budget and actual performance as follows:

The budgeted labour rate for car detailers was $\backslash (\backslash$$ $20\backslash )$ per detailing hour in $20$X$3.$ The actual labour rate was the same as the budgeted labour rate for car detailers in May $20$X$3.$ The average price of car detailing service was determined by the average detailing hours spent on each service.

The monthly wage of a car detailer was paid at the end of each month based on his or her detailing hours in that month. On top of the monthly wage, a car detailer was also entitled to a year$-$end bonus based on his or her total detailing hours in that year.

Question $4$a

Prepare supplies purchase budget for March and April $20$X$3.$

Question $4$b

Calculate budgeted cash disbursement for supplies in April $20$X$3.$

Question $4$c

Construct a performance report for May $20$X$3,$ showing the flexible budget, actual performance, and revenue and spending variances.

$(8$ marks$)$

Question $4$d

Discuss whether the design of car detailers' compensation is aligned with HFD$\text{'}$s organizational architecture $($OA$).$ Describe one $(1)$ improvement to the current design.