Question 4 (of 4) value 1.00 points The auto repair shop of Quality M shop. The

Question

Question 4 (of 4) value 1.00 points The auto repair shop of Quality M shop. The standard labor cost for a motor tune-up is given below otor Company uses standards to control the labor time and labor cost in the Stand tune-up 2 5 S9.00 $22.50 The record showing the time spent in the shop last week following variance data relating to tune-ups on motor tune-ups has been misplaced. However e shop supervisor recalls that 50 tune-ups were completed during the week, and the controller recalls the S 87F S 93 U 1 Labor spending variance Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week OCELL PHONE USE RECEIPTS GIVEN ON AL Up

Explanation / Answer

SOLUTION

(1) Spending Variance = Labor rate variance + Labor efficiency variance

-93 = 87 + Labor efficiency variance

Labor efficiency variance = 87 + 93 = 180 U

Labor efficiency variance = Standrad rate * (Actual hours - Standard hours)

$180 U = $9.00 * (Actual hours - 125 hours)

$180 U = ($9.00 * Actual hours) - $1,125

$9.00 * Actual hours = $1,125 + $180

$9.00 * Actual hours = $1,305

Actual hours = $1,305 / 9

Actual hours = 145 hours

Standard hour = 50 jobs *2.5 hours per job = 125 hours

(2) Labor rate variance = Actual hours * (Actual rate - standard rate)

-$87 = 145 * (Actual rate - $9.00)

-$87 = (145 * Actual rate) - $1,305

(145 * Actual rate) = $1,305 - $87

145 * Actual rate = $1,218

Actual rate= $1,218 / 145

Actual rate= = $8.40 per hour

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