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 3.00 $7.00 $21.00 The record showing the time spent last week in opening batches of mail has been misplaced. However, the batch supervisor recalls that 250 batches were received and opened during the week, and the controller recalls the following variance data relating to these batches:

Total labor spending variance $ 2,388

favorable Labor rate variance $ 848 favorable

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

Required: 1. Determine the number of actual labor-hours spent opening batches during the week.

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

Explanation / Answer

labor spending variance=SH*SR-AH*AR=$2,388

250*3*$7-AH*AR=$2,388

AH*AR=$5,250-$2,388=$2,862

Labor rate variance=AH(SR-AR)=$848

AH($7-AR)=$848

$7 *AH-AH*AR=$848

$7*AH-$2,862=$848

$7*AH=$848+$2,862=$3,710

AH=$3,710/$7=530 Hours

Actual labour hours=530 hours

AH*AR=$2,862

AR=$2,862/530=$5.4

actual hourly rate paid=$5.4

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