Calculate the labor rate and efficiency variances

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Reference no: EM131812417

K&J Web Designs creates Web sites for businesses. K&J has a basic Web site creation package that it offers for a flat fee of $750. This package includes everything that a business would need to have a simple but functional Web site built. K&J estimates that each of these Web sites should take, on average, 7.7 hours of Web designer time. K&J pays its Web design employees an average of $36 per hour.

Last month, K&J sold and built 140 Web sites for $750 each. Web design employees worked a total of 840 hours at a total payroll cost of $38,640.

1)Calculate the labor rate and efficiency variances for the past month. (Enter all variances as a positive number.)
Labor Rate Variance $___________ (Favorable/ Neither Favorable or Unfavorable/Unfavorable)
Labor Efficiency Variance $__________ (Favorable/ Neither Favorable or Unfavorable/Unfavorable)

2)Calculate the standard amount of contribution margin (sales price less variable labor cost) that K&J would expect to make on an average Web site. (Round answer to 0 decimal places, e.g. 125.)
Contribution margin $_____________per Web site

3)Calculate the actual amount of contribution margin (sales price less variable labor cost) that K&J made, on average, on each Web site in the past month. (Round answer to 0 decimal places, e.g. 125.)

Reference no: EM131812417

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