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14 October, 17:19

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:

Standard Hours Standard Rate Standard Cost

Motor tune-up 2.50 $36.00 $90.00

The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 230 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:

Labor rate variance $ 900 F

Labor spending variance $ 249 F

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.)

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Answers (1)
  1. 14 October, 19:58
    0
    Instructions are below.

    Explanation:

    Giving the following information:

    Standard Hours Standard Rate Standard Cost

    Motor tune-up 2.50 $36.00 $90.00

    230 tune-ups were completed during the week

    Labor rate variance $ 900 F

    Labor spending variance of $ 249 F

    1) First, we need to calculate the actual hours:

    Direct labor time (efficiency) variance = (Standard Quantity - Actual Quantity) * standard rate

    249 = (2.5*230 - actual quantity) * 36

    249 = 20,700 - 36AQ

    -20,451 = - 36AQ

    20,451/36 = Actual quantity

    568 = actual quantity

    2) We need to calculate the actual rate:

    Direct labor rate variance = (Standard Rate - Actual Rate) * Actual Quantity

    900 = (36 - Actual Rate) * 568

    900 = 20,448 - 568Actual Rate

    19,548/568 = Actual Rate

    $34.42 = Actual Rate
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