There are 4 questions to this problem, please answer them all. ( I bolded the qu

Question

There are 4 questions to this problem, please answer them all. ( I bolded the questions for you) :)

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 $740. 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, 7.3 hours of Web designer time. K&J pays its Web design employees an average of $45 per hour.

Last month, K&J sold and built 150 Web sites for $740 each. Web design employees worked a total of 880 hours at a total payroll cost of $39,600.

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.)

There are 4 questions to this problem, please answer them all. ( I bolded the questions for you) :)

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 $740. 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, 7.3 hours of Web designer time. K&J pays its Web design employees an average of $45 per hour.

Last month, K&J sold and built 150 Web sites for $740 each. Web design employees worked a total of 880 hours at a total payroll cost of $39,600.

Explanation / Answer

1)Labor rate variance = Actual cost - (AH *SR)

                          = 39600 - (880 * 45)

                          = 39600 - 39600

                          = 0 -nONE

Labor efficiency variance= SR [AH -SH]

           = 45   [880 - (150* 7.3)]

          = 45 [880 - 1095]

         = 45 * -215

          = -9675 F

2)COntribution margin =(740*150)-39600

                      = 111000-39600

                        = 71400

per website contribution margin = 71400 / 150 = 476 per website

3) Standard margin = 740 - (7.3*45)

                    = 740 - 328.5

                     = 411.5

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