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Safari File Edit View History Bookmarks Window Help ezto.mheducation.com Confirmation - FAFSA on the Web Federal Student Aid Chapter 8 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 JobStandard Hours Standard Rate Standard Cost Motor tune-up 1.50 $6.20 S9.30 The record showing the time spentin the shop last week on motor tune-ups has been misplaced. However 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 Labor spending variance $318 F $829 U Required: 1 Determine the number of actual labor-hourspent on tune-ups during the week. ual labor hours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) rate per hour

Explanation / Answer

Answer 1.

Standard labor Rate per hour = $6.20
Standard hours per tune-up = 1.50
Number of tune-ups = 230

Standard labor hours = 230 * 1.50
Standard labor hours = 345

Labor Spending Variance = Standard Rate * (Actual labor hours - Standard labor hours)
$829 = $6.20 * (Actual labor hours - 345)
134 = Actual labor hours - 345
Actual labor hours = 479

Answer 2.

Labor Rate Variance = Actual labor hours * (Actual labor Rate - Standard labor rate)
-318 = 479 * ((Actual labor Rate - $6.20)
-$0.66 = Actual labor Rate - $6.20
Actual labor Rate = $5.54 per hour

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