The auto repair shop of Quality Motor Company uses standards to control the labo
ID: 2468821 • 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:
Job Standard Hours Standard Rate Standard Cost
Motor tune-up 1.50 $6.20 $9.30
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 230 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
Labor rate variance $ 294 F
Labor spending variance $ 605 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.)
.2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)
Explanation / Answer
SRSH SRAH ARAH
6.20 x 345 6.20 x 490 5.6 x 490
=$2,139 =3,038 =2,744
SR=Standard Rate per Labor hr=$6.20
SH= Standard hrs required for actual production= 1.5 x 230= 345 hrs
AH= Actual hrs worked=?
AR= Actual Rate per labor hr=?
Direct Labor Spending Variance= SRSH- ARAH=$605 U
= 2,139 – ARAH= - $ 605
ARAH= 2,139 +605
ARAH= $2,744
Direct Labor Rate Variance= SRAH- ARAH=$294 F
=SRAH- 2,744= 294
SRAH= 2,744+294
SRAH=$3,038
1. Determine the number of actual labor-hours spent on tune-ups during the week.
AH=3,038/6.2=490 Hrs
2. Determine the actual hourly rate of pay for tune-ups last week.
ARAH= $2,744
AR=2,744/490
=$5.60
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.