The auto repair shop o Quality Motor Company uses standards to control the labor

Question

The auto repair shop o Quality Motor Company uses standards to control the labor time and labor cost n the shop. The standar a orcos for a motor une-up is en below: Job Motor tune-up Standard Standard Standard Rate $4.00 Hours 2.60 Cost $10.40 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: Labor rate variance Labor spending variance $180 U $108 U Required 1. Determine the number of actual labor-hours spent on tune-ups during the week Actual labor hourshours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) ual hourly rate per hour

Explanation / Answer

Labor efficiency variance = Labor spending variance-Labor rate variance = 108-180 = $72 F 1 Labor efficiency variance=SR*(SH-AH) 72=4*(180*2.6-AH) 18=468-AH AH = 450 hours Actual labor hours=450 hours 2 Labor rate variance=AH*(AR-SR) 180=450*(AR-4) 0.4=AR-4 AR = 4.4 Actual hourly rate = $4.4 per hour

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