Question

1.

value:
10.00 points

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:

Job	Standard Hours	Standard Rate	Standard Cost
Motor tune-up	1.80	$5.50	$9.90

The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 170 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:

Labor rate variance	$	255	F
Labor spending variance	$	867	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.)

     

Answer 1

Labor efficiency variance = 867+255 = 1122 U

a) Labor efficiency variance = (Standard hour-actual hour)Standard rate

-1122 = (170*1.8*5.5-5.5X)

5.5X = 1683+1122

X(actual hour) = 510 Hour

b) Labor rate variance = (Standard rate-actual rate)actual hour

255 = (5.5*510-510X)

510X = 2805-255

X(actual rate) = 5 per hour