K&J Web Designs creates Web sites for businesses. K&J has a basic Web site creat

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 $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, 7.5 hours of Web designer time. K&J pays its Web design employees an average of $40 per hour.

Last month, K&J sold and built 160 Web sites for $740 each. Web design employees worked a total of 800 hours at a total payroll cost of $38,400.

(a)

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, 7.5 hours of Web designer time. K&J pays its Web design employees an average of $40 per hour.

Last month, K&J sold and built 160 Web sites for $740 each. Web design employees worked a total of 800 hours at a total payroll cost of $38,400.

Explanation / Answer

A Standard Hours        1,200 B Actual Hours            800 C Standard Rate $          40 D Actual Rate $          48 Labor Rate Variance (C-D)xB - Unfavorable $    6,400 Labor Efficiency Variance(A-B) xC-Favorable $ 16,000

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