The auto repair shop of Quality Motor Company uses standards to control the labo

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: Standard Standard Standard Job Motor tune-up Hours 3.00 Cost $21.00 $7.00 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 250 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 $1,540 F $2,940 F Required 1. Determine the number of actual labor-hours spent on tune-ups during the week. tual labor hours hours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) Actu ? leerhour al hourly rate

Explanation / Answer

1) Labour efficiency variance = 2940-1540 = 1400 F

Labour efficiency variance = (Standard hour-actual hour)standard rate

1400 = (250*3-X)7

1400 = 5250-7X

7X = 3850

X(actual hour) = 550 Hours

2) Labour rate variance = (Standard rate-actual rate)actual hours

1540 = (7*550-550X)

550X = 2310

X(actual rate) = 4.20 per hour  

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