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:

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:

Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)

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:

Explanation / Answer

Particulars Standard Actual Hrs Rate amount Hrs Rate amount Labour            306.00      5.5000            1,683.00            550.00            5.60            3,080.00 Actual output            170.00 Labour hrs reqd(170*1.8)            306.00 Labour Spending var = Std Labour - Actual Labour cost -1397 = 1683 - Actual Labour Cost Actual Labour Cost = 1397 + 1683   Actual Labour Cost = 3,080 Labour Spending = Labor rate + Labor eff Var 1397 = 55 + Lab Eff Lab our eff Var = 1397 - 55 = 1,342 U DLEV = (SH-AH)SR -1342 = (306 - AH)5.5 -244 = 306-AH AH = 550 Hours Actual Labour cost        3,080.00 Actual Hours            550.00 Actual Hourly rate(3080/550)                 5.60

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