Variance analysis, nonmanufacturing setting. 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 SIS per vehicle. There were no wage increases in June.

In-A-FIash Car Detailing Actual and Budgeted Income Statements For the Month Ended June 30, 2014

Budget Actual
Cars detailed 280 320
Revenue $53,200 $72,000

Variable costs
Costs of supplies 1260 1360
Labor 6720 8400
Total variable costs 7980 9760
Contribution margin 45,220 62,240
Fixed costs 9800 9800
Operating income $35,420 $52,440

Required:
a. How many offices, on average, did Baker budget for each employee?
b. How many cars did each employee actually detail? 2. Prepare a flexible budget for April 2017.
c. Compute the sales price variance and the labor efficiency variance for each labor type.
d. What information, in addition to that provided in the income statements, would you want Baker to gather, if you wanted to improve operational efficiency?