A regional not-for-profit organization builds homes for low-income families in need of safe and affordable housing. The organization must hire contractors to oversee the construction of these homes. During the past year, the organization spent more than expected on contractors and the manager is trying to figure out what factors led to this increase in expenses. The organization had expected to

build 50 homes and hire 10 contractors for a total of 2,000 hours; however, the organization was actually able to build 55 homes during the past year, and they hired 12 contractors who worked 2,090 hours in total. The contractors were expected to be paid $35 per hour but were actually paid $37 per hour. Use the space below to perform a variance analysis and then respond to the following questions:

a) What is the price variance? Make sure to label the variance as favorable or

unfavorable.

b) What variance contributed most to the total variance? What percentage of the

total variance is attributable to this variance?

c) Explain why the quantity variance in this scenario is either favorable or

unfavorable.