The auto repair shop of Quality Motor Company uses standards to control the labo

Question

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:

The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 180 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:

Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)

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:

Explanation / Answer

Let the actual hours = X

Labor Spending variance = (standard hours - actual hours) * Standard rate

(990 u/ 180) = (2.60 - x) * 4

- 5.5 = 10.40 - 4x

4x = 15.9

x = 3.975

1.Number of actual labor-hours spent on tune-ups during the week = 3.975 * 180 = 715.5

Let the actual rate = X

Labor rate variance = (standard rate - actual rate) * actual payment hours

(742 u / 180) = (4 - X) * 3.975

-4.122222 = 15.9 - 3.975 X

20.022 = 3.975 X

X = 5.04

2. actual hourly rate of pay for tune-ups last week = $5.04*180 = 907.20

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