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: loW Motor tune-up Standard Hours Standard Rate Standard Cost 2.60 $4.00 $10.40 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 180 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 $752 U $760 U Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. hours Actual labor hours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) per hour ctual hourly rate

Explanation / Answer

1) Labour efficiency variance = 752 U-760 U = 8 U

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

                              -8        = (180*2.60-X)4

                             -8           = 1872-4X

                            4X             = 1880

X(Actual hour) = 470 hour

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

                   -752           = (4*470-470X)

                    -752           = 1880-470X

                470X                = 2632

X(Actual rate per hour) = 5.6 per hour

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