D HW 7 (Ch 8) Science ABC \" ? Oezto.mheducation.com/hm.tpx Academica }: Mail x

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D HW 7 (Ch 8) Science ABC " ? Oezto.mheducation.com/hm.tpx Academica }: Mail x (- Apps Canvas Apple Bing G Google?Yahoo 90 H Exercise 8-11 Working Backwards from Labor Variances [LO8-5) 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 Motor tune-up 2.10 56.50 $13.65 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 140 tune-ups were completed during the week, and the controller following variance data relating to tune-ups Labor rate variance Labor spending variance 357 F $1,047 U Required: 1 Determine the number of actual Ilabor-hours spent on tune-ups duning the week hours 2. Determine the actual hourly rate of pay for tune-upe last week. (Round your answer to 2 decimal places.) per hour Hints References eBook & Resources

Explanation / Answer

Quality motor company ;-

As we know that, labor efficiency variance = (standard hours allowed for actual production – actual hours) * standard rate (equation 1)

Or

Labor total variance = labor efficiency variance + labor rate variance

Labor efficiency variance = 1047(u) +357(f) = 1404(u)

Now keeping the values in equation 1, we get;-

1404(u) = (140*2.10 AH)*6.50

1404(u) = (294AH)* 6.50

1404(u)/6.50= (294AH)

216(u) = (294AH)

Since it is unfavorable, means AH are more than SH

AH=294+216=510 hours

Now, LRV= (SR*AR)*AH

(6.50AR)*510=357(F)

6.50AR=0.7

AR=6.50-0.7=5.8

AR=$ 5.8

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