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SALES -VOLUMESTATICVARIANCESBUDGET3,000 U 15,000 60,000 U 300,000 24,000 F 120,000 36,000 U 180,000 - 145,000 36,000 U 35,000 e informative thancted, as shown in of the variance that le-budget varianceplanation for thisto the flexible
(VARIANCE ANALYSIS , NONMANUFACTURING SETTING)How many cars on average, did Marcus budget for each employee? How manycars did each employee actually detail?Prepare a flexible budgetDetermine the formula to show how many cars , on average, the employees detailed( E * X ) + ( F * Y ) = BX=# of cars detailed by experienced employeeY=# of cars detailed by both less experienced employBUDGETED30x + 15y =6720(total labor costs)6720- 4200 = 2520 (Y)15x=2520x=2520y=(280-X)$15.00 168 280-168 = 112(ACTUAL)BUDGETEDACTUAL# OF# OFCARSCARSExperienced emp1682408400- 4800 = 3600 (y)less experienced1128015x=3600income statementFlexableBudgetActualBudgetCars Detailed280320320Revenues532007200060800Variable costs- Cost of Supplies126013601440- Labor672084007680Total variable costs798097609120Contribution margin452206224051680Fixed costs980098009800Operating income35420524404188030x + 15(280-x) = 672015*280= 420030x15y = 840030x + 15(320-x) = 840015 * 320= 4800
Compute the sales price variance and the labor efficiency variance for each labor type
What information, in addition to that provided in the income statements, would you wantMarcus to gather, if you wanted to improve operational efficiency?
a)Contribution marginb)Labor costsc)Operating incomed)Revenuee) Wages paid to experiencedemployer per carf)Wages paid to unexperiencedemployer per caryee1 employee10 year exp$30/car2 employeesless exp$15/car2 hours to detail a car3600240$15.00 (+320 * 53200 / 280)Actual cars * Budgeted revenues / budget cars(+320 * 1260 / 280)Actual cars * Budgeted Cost of supplies / budget cars(+320 * 6720 / 280)Actual cars * Budgeted Labor / budget cars(+320 * 6720 / 280)320-240 = 80
DIRECT LABOR VARIANCES: PRICE, EFFICIENCY, MIX AND YIELDGEORGE EXPERIENCED$30 10 HRS/GUITAREARL LESS EXPERIENCED$20 laborCost ofQuantityPrice/hr1 guitarGEORGE63018060%EARL4208040%260August made25 guitarsActual direct labor costshrsGeorge145$ 4,350 Earl1082160$ 6,510