Question

Exercise 10-5 Working Backwards from Labor Variances (LO10-2] The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop. The standard labor cost for a motor tune-up is given below: Standard Hours 2.50 Standard Rate $25.00 Standard Cost $62.50 Motor tune-up The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 50 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance Labor spending variance $ 150 F $ 200 U Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) 1. Actual labor hours 2. Actual hourly rate Perin hours per hour 2. Actual hourly rate

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) 3 Firstly we have to calculate the labor effeciency variance 5 labor effeciency variance = labor spending variance - labor rate variance 6 = 200 U - 150 F 7 = 350 Unfavourable 9 Labor effeciency variance = (actual hours - standard hours)*standard rate 10 350 = (actual hours - (50*2.5))*25 11 350/25 = actual hours-125 12 14 +125 = actual hours 13 actual hours = 139 hours 16 labor rate variance = (actual rate - standard rate) *actual hours 17 - 150 = ( actual rate - 25)*139 18 - 150/139 = actual rate -25 19 -1.08+25 =actual rate 20 actual rate = $ 23.92 22 Thus the final answer 1 Actual Labour Hours 2 Actual Hourly Rate 139 Hours 23.92 Per Hour