Exercise 23-4 Monte Services, Inc. is trying to establish the standard labor cos

Question

Exercise 23-4 Monte Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the oil change Hourly wage rate Payroll taxes Setup and downtime Cleanup and rest periods Fringe benefits 1.00 hour $12 10% of wage rate 20% of actual labor time 30% of actual labor time 25% of wage rate Your answer is correct. Determine the standard direct labor hours per oil change. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor hours per oil change 1.5 hours SHOW SOLUTIONSHOW ANSWER LINK TO TEXT LINK TO TEXT Your answer is incorrect. Try again Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor hourly rate 13.20 LINK TO TEXT LINK TO TEXT Your answer is incorrect. Try again Determine the standard direct labor cost per oil change. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor cost per oil change 19.80 LINK TO TEXT LINK TO TEXT

Explanation / Answer

Standard direct labor hrs per oil change = 1+.20+.30=1.5 hrs

Standard direct labour cost per hr = 12 per hour

Standard labor cost = 1.5 * 12= 18

Standard quantity variance

=( standardhours - actual hours)* standard rate

=(1.5-1.6)*12

=1.20 unfavourable

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