K&J Web Designs creates websites for businesses. K&J has a basic website creation package that it offers for a flat fee of $750. This package includes everything that a business would need to have a simple but functional website built. K&J estimates that each of these websites should take, on average, 7.5 hours of Web designer time. K&J pays its Web design employees an average of $42 per hour. Last month, K&J sold and built 150 websites for $750 each. Web design employees worked a total of 850 hours at a total payroll cost of $42,000.
Required
a. Calculate the labor rate and efficiency variances for the past month.
b. Calculate the standard amount of contribution margin (sales price less variable labor cost) that K&J would expect to make on an average website.
c. Calculate the actual amount of contribution margin (sales price less variable labor cost) that K&J made, on average, on each website in the past month.