Compute sales price variance and labor efficiency variance

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Reference no: EM132486667

Solo is repair shop that run a business to fixing cars. The static budget and actual results for Jun 2019 are provided in the below table. There are two full time employees for in the repair shop. In addition at any given time, the manager also employs two other less experienced workers. It usually takes each employee 2 hours to fix a vehicle regardless of his experience. The manager of Solo pays the experienced employees $45 per vehicle and $25 for the other employees.

Budget Actual

Car modification 410 360

Revenue $63,580 $72,000

Variable costs:

1- Cost of supplies 1,386 1,260

2- Labor 7,920 6,830

Total variable cost 8,778 7,980

Contribution margin 49,742 47,020

Fixed cost 10,780 9,800

Operating income 38,962 37,220

Question 1: How many cars on average did Solo budget for each employee? How many cars did each employee actually fixed?

Question 2: Prepare a flexible budget for Jun 2019?

Question 3: Compute sales price variance and the labor efficiency variance for each labor type?

Reference no: EM132486667

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