Problem 11-4 (Part Level Submission) Sipacore Web Designs creates websites for b
ID: 2578264 • 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.
Calculate the actual amount of contribution margin (sales price less variable labor cost) that Sipacore made, on average, on each website in the past month. (Round answer to 0 decimal places, e.g. 125.)
Explanation / Answer
Actual contribution margin = $556 per web site
Actual contribution margin= sales - variable cost Sales 150 x 800 120,000 Variable cost 36,660 Actual contribution margin 83,340 No. of websites sold 150 Actual contribution margin per web site 556