Question
Espresso Web Designs creates websites for businesses. Espresso has a basic website creation package that it offers for a flat fee of $720. This package
Espresso Web Designs creates websites for businesses. Espresso has a basic website creation package that it offers for a flat fee of $720. This package includes everything that a business would need to have a simple but functional website built. Espresso estimates that each of these websites should take, on average, 8.2 hours of Web designer time. Espresso pays its Web design employees an average of $40 per hour.
Last month, Espresso sold and built 160 websites for $720 each. Web design employees worked a total of 840 hours at a total payroll cost of $42,000.
Labor Rate Variance- 8440 Unfavorable
Labor Efficiency Variance- 18880 Favorable
-----Calculate the standard amount of contribution margin (sales price less variable labor cost) that Espresso would expect to make on an average website.
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