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: 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 $ 612 Fav. Labor spending variance $ 411 Unfav. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)

Explanation / Answer

Standard Hours : 1.50

Standard Rate: $6.20

Standard Cost Motor tune-up: $9.30

Labor rate variance $ 612 Fav

Labor spending variance $ 411 Unfav

Total Efficience Variance: $ 612Fav+$ 411 Unfav

Total Efficience Variance: $ 1023 Unfav

Efficiency Variance= Standard Rate (Actual hours- Standard Hours)

$1023=$6.20[Actual hours-(230*1.5)]

$1023=$6.20[Actual hours-345]

$1023=$6.20[Actual hours-345]

Actual Hours=510 Hours

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