Sassy Snaps is a free-standing photo kiosk that allows customers to enter the kiosk,either alone or with up to 4 friends,and have a series of 5 pictures taken.The pictures are printed for immediate take-away by the customer.Maddie Maple leases several Sassy Snaps kiosks and has one placed in the student union at her college.She pays the union $96 per month to rent the space for her kiosk,she pays Sassy Snaps $144 per month to lease each kiosk.In addition,she pays Sassy Snaps $108 per month for a service to clean the kiosk and ensure it's in top working condition.Each set of pictures costs $4.During October,Maddie had revenue from the college kiosk of $432,and expenses for paper of $64.80 and chemicals of $34.56.If Maddie experienced an unfavorable variance of $2.16 for paper,a favorable variance of $3.24 for chemicals,and no variance for revenue,what was the budgeted amount for paper per set of pictures?

A) $0.60
B) $0.58
C) $0.62
D) $0.63
E) $0.59

Question

Opadeji Folashade Oluwabukola · Accepted Answer

Final Answer : B, Explanation :  To solve this problem, we need to first calculate Maddie's total costs for each set of pictures:Lease cost per set = (144 + 108) / 5 = $50.40Cost of paper and chemicals per set = (64.80 + 34.56) / 5 = $19.87Total cost per set = $50.40 + $19.87 = $70.27We are given that Maddie had no variance for revenue, so her revenue per set of pictures is $4. Therefore, her profit per set of pictures is:Profit per set = Revenue per set - Total cost per set = $4 - $70.27 = -$66.27Now we can use the information on the variances:Unfavorable variance for paper = actual cost - budgeted cost = $64.80 - xFavorable variance for chemicals = budgeted cost - actual cost = x - $34.56We are given that the net variance is -$2.16 + $3.24 = $1.08, which means that the actual total cost per set was $1.08 more favorable than the budgeted total cost per set. We can use this information to solve for x:Actual total cost per set = $70.27 - $1.08 = $69.19Actual cost of paper per set = $64.80 - ($1.08 / 2) = $64.26Budgeted cost of paper per set = xFavorable variance for paper = budgeted cost - actual cost = x - $64.26We can now set up the equation:Favorable variance for paper - unfavorable variance for paper = $1.08x - $64.26 - ($2.16 / 2) = $1.08x - $65.17 = $1.08x = $66.25Therefore, the budgeted amount for paper per set of pictures is $66.25 / 100 = $0.6625, which rounds to $0.58.The best choice is B, with the explanation given above.

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