Question

using the Smith's barbecue report if hourly wages increase by 10% next week from the current week and all other costs State constant what will the variance of total payroll be next weekA 13177B 9347C 1198D 858

Answer 1

So the vaiance of total payroll that we have to find is given by the next week total payroll less the current week total payroll. The last payroll is given by the report: $14081. The total payroll of next week will only differ in the hourly wages. This means that the cost of all wages will increase and therefore the total payroll of that week will also increase.

We are told that the hourly wage increases by 10% comparing it with the hourly wage from the current week that is $8579. Then the hourly wage for the next week will be:

`8579\cdot1.1=9436.9`

Where multiplying by 1.1 increases the other factor by 10%. Now that we calculated the increment we can find the total payroll for the next week. This is equal to the sum of total wages and total benefits and the first quantity is also the sum of management and hourly wages. Then we have:

`\begin{gathered} \text{Total payroll }=\text{ Total wages }+\text{ Total benefits }=\text{ Management }+\text{ Hourly}+\text{ Total benefits} \\ \text{Total payroll }=3400+9436.9+2102=14938.9 \end{gathered}`

Then the variance of total payroll between the next week and the current week is:

`\text{ Variance }=\text{ next week payroll }-\text{ current week payroll }=14938.9-14081=857.9`

If we round it to the nearest integer we get a payroll variance of $858. Then the answer is option D.