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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

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.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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a Labor Rate Variance AR SR AH 38 35 750 2 250 unfavorable Labor Effici…View the full answer


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Related Book For  answer-question
Managerial Accounting

Managerial Accounting

ISBN: 978-0470578797

4th edition

Authors: James Jiambalvo

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Posted Date: September 23, 2013 09:17:02
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