The Worldwide Credit Card, Inc., uses standards to control the labor time involv

Question

The Worldwide Credit Card, Inc., uses standards to control the labor time involved in opening mail from card holders and recording the enclosed remittances. Incoming mail is gathered into batches, and a standard time is set for opening and recording each batch. The labor standards relating to one batch are as follows:

The record showing the time spent last week in opening batches of mail has been misplaced. However, the batch supervisor recalls that 170 batches were received and opened during the week, and the controller recalls the following variance data relating to these batches:

Determine the actual hourly rate paid to employees for opening batches last week.

The Worldwide Credit Card, Inc., uses standards to control the labor time involved in opening mail from card holders and recording the enclosed remittances. Incoming mail is gathered into batches, and a standard time is set for opening and recording each batch. The labor standards relating to one batch are as follows:

Explanation / Answer

Hi,

Please find the answers as follows:

Part 1:

(Actual Hours - Standard Hours)*Standard Rate = 861 (U)

(Actual Hours - 170*1.8)*5.5 = 861

5.5 Actual Hours - 1683 = 861

Actual Hours = (1683 + 861)/5.5 = 462.55

Part 2:

Actual Hours*(Standard Rate - Actual Rate) = 371

462.55*(9.9 - Actual Rate) = 371

4162.95 - 462.55 Actual Rate = 371

Actual Rate = 3791.95/462.55 = 8.197 or 8.20

Thanks.

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