After graduating from Yorkville University, you begin working as a senior manager for a major office cleaning company. Your boss has hired you at a salary of $127,000 per year because of your honesty and the ethical behaviour you demonstrated while you were studying at Yorkville. Your boss knows that you have strong skills in Managerial Accounting as you attended every class and never plagiarized or cheated on any of the Exams or Learning Activities.

Below is your company’s static budget and actual results for the month of August. Your company has one experienced employee and two less experienced workers. It normally takes an employee two hours to clean an office. The company pays $35 per office to the experienced employee and $25 per office to the other less experienced employees. Wages are increased at the rate of inflation and are only awarded in December.

Office Cleaning Inc.

August 2020

Budget	Actual
Office Cleaned	240	260
Revenue	50,400	65,000
Variable Costs
Costs of Supplies	1,230	1,330
Labour	6,900	7,500
Total Variable Costs	8,130	8,830
Contribution Margin	42,270	56,170
Fixed Costs	5,000	5,000
Operating Income	37,270	51,170

Your boss has asked you to analyse the results and answer the following Four (4) questions.

1. How many offices, on average, did Office Cleaning Inc. budget for each employee? How many offices did each employee clean?
2. Prepare a Flexible Budget for August 2020
3. Compute the sales price variance and labour efficiency variance for both the experienced and less experienced employees.
4. What other information would you want Office Cleaning Inc. to gather if you wanted to improve operational efficiency?