university of southern california Operations And Supply Chain Management Assignment Help - Variance analysis

Question - Variance analysis, non manufacturing setting
Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static budget and actual
results ?~or June 2011 are provided below. Stevie has one employee who has been with him for all
ten years that he has been in business. He has not been as lucky with his second and third
employees. Stevie is hiring new employees in those positions almost every second month. It usually
takes 2 hours to detail a vehicle. It takes as long for the seasoned employee as for the new ones, as
the former tends to put more into the job. Stevie pays his long-term employee $20 per hour and the
other two employees $10 per hour Stevie pays all employees for 2 hours of work on each car,
regardless of how ...Read More long the work actually takes them. There were no wage increases in June.

1. Prepare a statement of the static budget variances that Stevie would be interested in.
2. Compute any flexible budget variances that you believe would be appropriate.
3. W hat information, in addition to that provided in the income statements, would you want Stevie to
gather, if you wanted to improve operational efficiency?
4. How many cars, on average, did Stevie budget for each employee? How many cars did they
actually detail?
5. W hat advice would you give Stevie about motivating hisemployees? ...Read Less

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