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:

Standard Hours

Standard Rate

Standard Cost

  Per batch

2.60         

$ 4.00         

$ 10.40        

The record showing the time spent last week in opening batches of mail has been misplaced. However, the batch supervisor recalls that 180 batches were received and opened during the week, and the controller recalls the following variance data relating to these batches:

  Total labor spending variance

$

288

U

  Labor rate variance

$

360

U

Required:

1.

Determine the number of actual labor-hours spent opening batches during the week.

  Actual labor-hours

hours

2.

Determine the actual hourly rate paid to employees for opening batches last week. (Round your answer to 2 decimal places.)

  Actual hourly rate

$

per hour

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

(Actual Hours - Standard Hours)*Standard Rate = 288 (U)

(Actual Hours - 180*2.6)*4 = 288

4 Actual Hours - 1872 =288

Actual Hours = (1872 + 288)/4 = 540

======================================================================================================================================================

Actual Hours*(Standard Rate - Actual Rate) = 360

540*(10.40 - Actual Rate) = 360

5616 %u2013 540 Actual Rate = 360

Actual Rate = 5256/540= 9.73

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