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:

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:

Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)

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:

Explanation / Answer

1) Labor Spending variance = (AH-SH)*AR = 159(u) AH = Actual hours = ? SH = Standard Hours = 140*2.1 = 294 SR = Standard Rate per hour = $6.5 F= Favourable U = Unfavourable 159 (u) = (AH-294)*6.5 159=6.5AH-1911 159+1911 = 6.5AH AH = 2070/6.5 = 318.4615 2) Labor Rate variance = (AR-SR)*AH = 855 (f) AR = Actual Rate per hour = ? SR = Standard Rate per hour = $6.5 AH = Actual hours = 318.4615 F= Favourable U = Unfavourable 855(F) = (AR-6.5)*318.4615 855(F) = 318.4615AR-1752 318.4615AR = 2070-855 AR = 1215/318.4615 = $3.8152

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