3. Bill Smith is the dining room manager of the Cycle Club.
The wages budget for his department is divided between fixed and
variable expenses. The work standard for servers is to serve 10
meals per hour. The average wage rate per hour is $12.00. The
variable wages budget for servers for the first week of February is
$4,800 based on $12.00 per hour. Given the work standard, this is
also based on serving 4,000 people. During the first week of
February, the server wages totaled $5,200. During the first week of
February, the average hourly pay was $11.50 per hour. In addition,
4,200 members were provided service by the servers.
Required:
a. Determine the budget variance for server variable wage
expense.
b. Is the budget variance determined in #1 significant?
Explain.
c. Rate Bill Smith’s performance in managing the servers.
Support your discussion
with specific numbers from related variance analyses (rate
variance and efficiency variance).