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 Standard Hours Standard Rate Standard Cost

Motor tune-up 1.50 $6.20 $9.30

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.

Question

Houston Goodman

Business

Yesterday, 11:21

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 Standard Hours Standard Rate Standard Cost

Motor tune-up 1.50 $6.20 $9.30

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.

+4

Answers (1)

Know the Answer?

Sean Barrett · Answer 1

Actual Hours Worked = 106.5

Actual Rate = $14.6

Explanation:

Labor Spending Variance = Labor Efficiency Variance Labor Rate Variance

249 = Labor Efficiency Variance 900

Labor Efficiency Variance = 249-900 = (651)

Labor Efficiency variance = Actual Hours Worked * Standard Rate-Standard Hours Worked * Standard Rate

$651 = Actual Hours Worked * $6.20-1.50 * $6.20

$651 = Actual Hours Worked * $6.20 - 9.3

651+9.3 / 6.2 = Actual Hours Worked

Actual Hours Worked = 106.5

Labor Rate Variance = Actual Hours Worked * Actual Rate - Actual Hours Worked * Standard Rate

$900 F = 106.5 * Actual Rate - 106.5 * $6.20

900 + 660.3 / 106.5=Actual Rate

Actual Rate = $14.6