The auto repair shop of Quality Motor Company uses standards to control the labo
ID: 2519294 • 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:
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 were completed during the week, and the controller recalls the following variance data relating to tune-ups:
Standard Hours Standard Rate Standard Cost Motor tune-up 2.5 $25.00 $62.50Explanation / Answer
Labour efficiency variance = (Standard hour-actual hour)Standard rate
-350 = (50*2.5-X)25
-350 = 3125-25X
25X = 3475
X(actual hour) = 139 hour
Labour rate variance = (Standard rate-actual rate)actual hour
150 = (25*139-139X)
150 = 3475-139X
139X = 3325
X(Actual rate per hour) = 23.92 per hour
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