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 Standard Standard Rate $6.50 Hours 2.10 Cost $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 $ 371F $1,163 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.) Actual hourly rate per hour

Explanation / Answer

Labor efficiency variance = 1163+371= 1534 U 1 Labor efficiency variance = SR*(AH-SH) 1534 = 6.50*(AH-140*2.1)= 236 = AH-294 Actual labor hours = 530 2 Labor rate variance = AH*(SR-AR) 371 = 530*(6.5-AR) 0.7 = 6.5-AR Actual rate = 5.8 per hour

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