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 | Standard Rate | Standard Cost | |
Motor tune-up | 1.90 | $6.60 | $12.54 |
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 200 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
Labor rate variance | $ | 954 | F |
Labor spending variance | $ | 36 | 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.)
Labor efficiency variance = Labor spending variance+Labor rate variance |
Labor efficiency variance = 36+954= $990 U |
1 |
Labor efficiency variance = SR*(AH-SH) |
990 = 6.60*(AH-200*1.90) |
150 = AH-380 |
AH = 380+150 = 530 |
Actual labor-hours = 530 |
2 |
Labor rate variance = Actual hours*(SR-AR) |
954 = 530*(6.60-AR) |
1.80 = 6.60-AR |
AR = 6.60-1.80 = 4.80 |
Actual hourly rate = $4.80 |
Exercise 10-5 Working Backwards from Labor Variances [LO10-2] The auto repair shop of Quality Motor Company...
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: Job Standard Hours Standard Rate Standard Cost Motor tune-up 2.5 $9.00 $22.50 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...
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: Job Standard Hours Standard Rate Standard Cost Motor tune-up 2.5 $9.00 $22.50 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...
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