Dynatech Web Designs creates websites for businesses. Dynatech has a basic websi

Question

Dynatech Web Designs creates websites for businesses. Dynatech has a basic website creation package that it offers for a flat fee of $780. This package includes everything that a business would need to have a simple but functional website built. Dynatech estimates that each of these websites should take, on average, 6.8 hours of Web designer time. Dynatech pays its Web design employees an average of $41 per hour.

Last month, Dynatech sold and built 170 websites for $780 each. Web design employees worked a total of 880 hours at a total payroll cost of $39,600.

Calculate the labor rate and efficiency variances for the past month. (Round intermediate calculations to 2 decimal places, e.g. 14.37 and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)

Calculate the standard amount of contribution margin (sales price less variable labor cost) that Dynatech would expect to make on an average website. (Round answer to 0 decimal places, e.g. 125.)

Explanation / Answer

Contribution margin per website = 780-(6.8*41)= 501

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