43% Exercises Help Save & Exit Submit Seved Check my work The auto repair shop o

Question

43% Exercises Help Save & Exit Submit Seved Check my work 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 sta lours 2.80 Rate 5.50 Cost 9-90 Motor tune-up 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: Labor rate variance Labor sponding variance 265 P 967U 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.) 1. Actual labor hours 2 Actual hourly rate hours per hour

Explanation / Answer

Answer 1.

Number of tune-ups = 170
Standard hours per tune-up = 1.80
Standard rate per hour = $5.50

Standard hours = Number of tune-ups * Standard hours per tune-up
Standard hours = 170 * 1.80
Standard hours = 306

Labor Spending Variance = Standard Rate per hour * (Actual hours - Standard hours)
$967 = $5.50 * (Actual hours - 306)
176 = Actual hours - 306
Actual hours = 482

Actual labor hours = 482 hours

Answer 2.

Actual hours = 482
Standard rate per hour = $5.50

Labor Rate Variance = Actual hours * (Standard Rate per hour - Actual Rate per hour)
$265 = 482 * ($5.50 - Actual Rate per hour)
$0.55 = $5.50 - Actual Rate per hour
Actual Rate per hour = $4.95

Actual hourly rate = $4.95 per hour

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