Question

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 $600.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, 6 hours of Web designer time. K&J pays its Web design employees an average of $35 per hour. Last month, K&J sold and built 125 Web sites for $600 each. Web design employees worked a total of 750 hours at a total payroll cost of $28,500.

Required
a. Calculate the labor rate and efficiency variances for the past month.
b. 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.
c. 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.



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  • CreatedSeptember 23, 2013
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