Marcus McQueen has run In-A-Flash Car Detailing for the past 10 years. His static budget and actual results for June 2014 are provided next. Marcus has one employee who has been with him for all 10 years that he has been in business. In addition, at any given time he also employs two other less experienced workers. It usually takes each employee 2 hours to detail a vehicle, regardless of his or her experience. Marcus pays his experienced employee $ 30 per vehicle and the other two employees $ 15 per vehicle. There were no wage increases in June.

1. How many cars, on average, did Marcus budget for each employee? How many cars did each employee actually detail?
2. Prepare a flexible budget for June 2014.
3. Compute the sales price variance and the labor efficiency variance for each labor type.
4. What information, in addition to that provided in the income statements, would you want Marcus to gather, if you wanted to improve operationalefficiency?

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In-A-Flash Car Detailing Actual and Budgeted Income Statements For the Month Ended June 30, 2014 Budget Actual Cars detailed Revenue Variable costs 280 $53 200 $72000 Costs of supplies 1,260 1,360 Labor 6720 8,400 Contribution margin Fixed costs Operating income Total variable costs9809760 62,240 9,800 $52,440 45,220 9,800 $35,420