Question

using the smiths bbq report, if hourly wages increase by 10% next week from the current week, and all other costs stay constant, what will the variance of total payroll be next week? smiths bbq march 7 march 1 variance current week last week (current week $ vs. last week $) sales food $ 34,421 81.4% $ 33,215 80.9% 1,206 liquor $ 3,201 7.6% $ 3,176 7.7% 25 beer $ 1,803 4.3% $ 1,699 4.1% 104 wine $ 2,888 6.8% $ 2,992 7.3% - 104 total sales $ 42,313 100.0% $ 41,082 100.0% 1,231 cost of sales food $ 9,832 23.2% $ 9,294 22.6% - 538 beverages liquor $ 884 27.6% $ 898 28.3% 14 beer $ 728 40.4% $ 722 42.5% - 6 wine $ 1,243 43.0% $ 1,268 42.4% 25 total beverages $ 2,855 36.2% $ 2,888 36.7% 33 total cost of sales $ 12,687 30.0%* $ 12,182 29.7% - 505 payroll management $ 3,400 8.0%* $ 3,400 8.3% 0 hourly $ 8,579 20.3%* $ 8,423 20.5% - 156 total wages $ 11,979 28.3%* $ 11,823 28.8% - 156 total benefits $ 2,102 5.0%* $ 2,098 5.1% - 4 total payroll $ 14,081 33.3%* $ 13,921 33.9% - 160 total cost $ 26,768 63.3% $ 26,103 63.5% - 655 % of total sales

Explanation:

Step1: Calculate the increased hourly wage

The current hourly wage is \( \$8,579 \). An increase of \( 10\% \) means the new hourly wage is \( 8579\times(1 + 0.1)=8579\times1.1=\$9,436.9 \)

Step2: Calculate the new total payroll

Management wage remains \( \$3,400 \). Total benefits remain \( \$2,102 \).
New total wages \(=3400 + 9436.9=\$12,836.9 \)
New total payroll \(=12836.9+2102=\$14,938.9 \)

Step3: Calculate the variance

Last week's total payroll was \( \$13,921 \)
Variance \(=14938.9 - 13921=\$1,017.9\approx\$1,018 \)

Answer:

\( \$1,018 \)