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 160 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:

Required:

1. Determine the number of actual labor-hours spent on tune-ups during the week.

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

Standard Hours Standard Rate Standard Cost Motor tune-up 2.50 $4.50 $11.25

Explanation / Answer

Labor spending variance= ( Standard Hrs x Standard Rate) –(Actual Hrs X Actual hrs)

-$730=(2.50 x 160 x $4.50)- (Actual Hrs X Actual hrs)

-$730 =$1,800-(Actual Hrs X Actual hrs)

Actual Hrs X Actual hrs=$1,800+$730

Actual Hrs X Actual hrs=$2,530

Labor rate variance = Actual hrs x (Standard Rate- Actual Rate)

Labor rate variance =(Actual hrs x Standard Rate)-( Actual hrs x Actual Rate)

$55 U =(Actual hrs x $4.50)-$2,530

-$55 +$2,530 =Actual hrs X $4.50

Actual hrs X $4.50=$2,475

Actual hrs=$2,475/$4.50

Actual hrs =550 hrs

Actual rate per hr =( Actual hrs x Actual Rate)/ Actual hrs

Actual rate per hr =$2,530/ 550

Actual rate per hr =$4.60

Actual Labor hrs

550 hrs

Actual hourly rate

$4.60

Actual Labor hrs

550 hrs

Actual hourly rate

$4.60

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