Question

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: Motor tune-up Standard Hours Standard Rate Standard Cost 2.50 $32.00 $80.00 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 52 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 $ 300 F $ 340 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 hours per hour

Answer 1

Labor efficiency variance = 340U - 300F = 640 U

(SH - AH) *SR = - 640

(2.50*52 - AH) *32 = - 640

(130 - AH) = - 20

ACTUAL LABOR HOURS = 150

Labor Rate Variance = 300 F

(SR - AR) *AH = 300

(32 - AR) *150 = 300

32 - AR = 2

ACTUAL HOURLY RATE = 30