The auto repair shop of Quality Motor Company uses standards to control the labo
ID: 2399581 • Letter: T
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 Hours
Standard Rate
Standard Cost
Motor tune-up
1.50
$6.00
$9.00
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 150 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
Labor rate variance
$
188
F
Labor spending variance
$
1,282
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.)
Standard Hours
Standard Rate
Standard Cost
Motor tune-up
1.50
$6.00
$9.00
Explanation / Answer
1.Determine the number of actual labor-hours spent on tune-ups during the week. Effiency Variance = 188+1282 = 1470 Also, Effiency Variance = SR(AH-SH) 1470 = $6(AH - 150*1.50 hrs) 1470 = $6(AH - 225) 245 = AH -225 AH = 245+225 AH = 470 hrs Therfore, Actual hrs worked is 470 hrs 2.Determine the actual hourly rate of pay for tune-ups last week Rate Variance = AH(AR-SR) -188 = 470(AR-$6) -0.4 = AR - 6 Actual Rate = -0.4+6 Actual Rate =$ 5.6 per hr
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