Sure, let's break down the problem step by step to calculate the variances and variance percentages for Faye's sales and labor costs from last year to this year.
1. Gather the initial data:
- Last year's sales: [tex]$100,000
- Last year's labor cost: $[/tex]30,000
2. Identify the percentage increases for this year:
- Sales increase: 5%
- Labor cost increase: 10%
3. Calculate this year's sales and labor costs:
- This year's sales = Last year's sales + (5% of last year's sales)
- This year's labor cost = Last year's labor cost + (10% of last year's labor cost)
To find these:
- This year's sales: [tex]$100,000 1.05 = $[/tex]105,000
- This year's labor cost: [tex]$30,000 1.10 = $[/tex]33,000
4. Calculate the variances:
- Variance in sales = This year's sales - Last year's sales
- Variance in labor cost = This year's labor cost - Last year's labor cost
To find these:
- Sales variance: [tex]$105,000 - $[/tex]100,000 = [tex]$5,000
- Labor cost variance: $[/tex]33,000 - [tex]$30,000 = $[/tex]3,000
5. Calculate the variance percentages:
- Sales variance percentage = (Sales variance / Last year's sales) 100
- Labor cost variance percentage = (Labor cost variance / Last year's labor cost) 100
To find these:
- Sales variance percentage: ([tex]$5,000 / $[/tex]100,000) 100 = 5%
- Labor cost variance percentage: ([tex]$3,000 / $[/tex]30,000) 100 = 10%
So, summarizing Faye's performance this year:
- This year's sales increased to [tex]$105,000.
- This year's labor cost increased to $[/tex]33,000.
- The variance in sales is [tex]$5,000, which corresponds to a 5% increase.
- The variance in labor cost is $[/tex]3,000, which corresponds to a 10% increase.
This detailed analysis shows the changes in Faye's Tea Room's financials, reflecting the impact of her pricing and wage adjustments.
