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 laborcost for a motor tune-up is given below Standard Standard Sta Rate $4.50 Cost $11.25 Job Hours 2.50 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 160 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance Labor spending variance $45 F $180 U Required 1. Determine the number of actual labor-hours spent on tune-ups during the week. labor hours hours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) Actual houty ralo per hour

Explanation / Answer

Labour efficiency variance = 180 U+45 F = 225 U

Labour efficiency variance = (Standard hour-actual hour)Standard rate

-225 = (160*2.5*4.5-4.5X)

4.5X = 1800+225

X(actual hours) = 450 hour

Labour efficiency variance = (Standard rate-actual rate)actual hour

45 = (4.5*450-450X)

450X = 1980

X(actual hourly rate) = 1980/450 = 4.4 per hour

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