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.)

Question

Business

Atlas

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.)

+5

Answers (1)

Know the Answer?

Amelie Wheeler · Answer 1

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