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: Job Motor tune-up Standard Hours Standard Rate Standard Cost 2.10 $6.50 $13.65 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 140 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 $663 F $741 U Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. Actual labor hours hours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) per hour Actual hourly rate

Explanation / Answer

Req 1: Labour rate variance: $ 663 F Labour Spending Variance: $ 741 U Labour Efficiency Variance: Labour spending variance - Labouor rate variance = $1404 U Std hours per unit of output: 2.10 hours Std rate per hour: $ 6.50 Actual Output: 140 tune ups Std hours allowed: (140*2.10): 294 hhours Laboue Efficiency Variance: Std rate per hour (Std hours allowed - Actual hours ) $ 1404 U = $ 6.50 (294 hours - Actual Hours) Actual hours spent : 510 hours Req 2: Labour rate variance : $ 663 F Labour rate variance = Actual Hours spent (Std rate per hour - Actual rate per hour) 663 F = 510 hours (6.50- Actual rate per hour) Actual rate per hour = $ 5.20 per hour

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