Problem 11-4 (Part Level Submission) Sipacore Web Designs creates websites for b
ID: 2578226 • Letter: P
Question
Problem 11-4 (Part Level Submission) Sipacore Web Designs creates websites for businesses. Sipacore has a basic website creation package that it offers for a flat fee of $800. This package includes everything that a business would need to have a simple but functional website built. Sipacore estimates that each of these websites should take, on average, 7.5 hours of Web designer time. Sipacore pays its Web design employees an average of $41 per hour. Last month, sipacore sold and built 150 websites for $800 each, web design employees worked a total of 780 hours at a total payroll cost of $36,660 (a) 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 o decimal places, e.g. 125. Enter all variances as a positive number.) Labor Rate Varlance Labor Efficiency Variance sExplanation / Answer
Answer:- Labor Rate variance = (Standard rate – Actual rate) * Actual hours
= ($41 per hour - $47 per hour)*780 hours
= $4680 U
Labor Efficiency variance = (Standard hours- Actual hours)*Standard rate per hour
=(1125 hours – 780 hours)*$41 per hour
= $14145 F
Where:-
Actual rate = Actual labor cost/Total actual hours
=$36660/780 hours = $47 per hour
Standard hours = Standard time per unit * Actual units (websites)
= 7.5 hours per unit*150 units
=1125 hours
Standard cost =Standard rate hour*stanadard hour per unit*Actual units
=$41 per hour *7.5 standard hours per unit*150 units
=$46125
Labor cost variance = Standard Cost – Actual cost
=$46125 -$36660
=$9465 F
Labor cost variance = Labor Rate variance+ Labor Efficiency variance
$9465 F = $4680 U +$14145 F