Jessica Banner has run Helping Hand Maids Helping Hand Maids?, a specialty cleaning service for medical and dental? offices, for the past 10 years. Her static budget and actual results for April 20172017 are shown below. 1? 2 Read the requirements3. Requirement 1. How many? offices, on? average, did Banner budget for each? employee? How many offices did each employee actually? clean? Determine the formula to show how many? offices, on? average, the employees cleaned. ?(X = number of offices cleaned by experienced ? employee, Y? = number of offices cleaned by both less experienced? employees) 4?(Click the icon for information regarding the formula? selections.)

 

( (1) x X ) + ( (2) x Y ) = (3)

?Next, calculate the budgeted and actual number of offices for each employee type.

Budgeted Actual number of offices number of offices Experienced employee Less experienced employees

Requirement 2. Prepare a flexible budget for June 20172017. ?(Round your answers to the nearest whole? dollar.)

Helping Hand Maids Income Statement Variances For the month ended April 30, 2017 Flexible Budget Actual budget Offices cleaned 290 320 Revenue $43,500 $56,000 Variable costs Costs of supplies 1,450 1,650 Labor 7,540 7,940 Total variable costs 8,990 9,590 Contribution margin 34,510 46,410 Fixed costs 9,300 9,300 Operating income $25,210 $37,110

Requirement 3. Compute the sales price variance and the labor efficiency variance for each labor type. Begin with the sales price variance. Determine the formula then compute the sales price variance. Label the variance as favorable? (F) or unfavorable? (U).

Sales price ( (4) - (5) ) x (6) = variance

( - ) x = (7)

?Next, determine the formula you will use to compute the labor efficiency variances. (8) Now compute the labor efficiency variance for each type of labor. Label the variance as favorable? (F) or unfavorable? (U).

Labor efficiency variance Experienced worker (9) Less experienced workers (10)

Requirement 4. What? information, in addition to that provided in the income? statements, would you want BannerBanner to? gather, if you wanted to improve operational? efficiency? In addition to understanding the variances computed? above, BannerBanner should attempt to keep track of the number of offices cleaned (11) ?, as well as the (12) .

chart:

Helping Hand Maids

Actual and Budgeted Income Statements

For the Month Ended April 30, 2017

Budget

Actual

Offices cleaned

290

320

Revenue

$43,500

$56,000

Variable costs:

Costs of supplies

1,450

1,650

Labor

7,540

7,940

Total variable costs

8,990

9,590

Contribution margin

34,510

46,410

Fixed costs

9,300

9,300

Operating income

$25,210

$37,110