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: Standard Hours 2.00 Standard Rate $6.40 Standard Cost $12.80 Motor tune-up The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 210 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: $ 810 F $ 618 F Labor rate variance Labor spending variance Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) 1. Actual labor hours hours 2. Actual hourly rate per hour

Explanation / Answer

Answer 1 Labour rate variance = [Actual labour hours * Actual labour rate] - [Actual labour hours * standard labour rate] Labour rate variance = [Actual labour hours * Actual labour rate] - [Actual labour hours * $6.40] = -$810 [323.4375 hours * Actual labour rate] - [323.4375 hours * $6.40] = -$810 [323.4375 hours * Actual labour rate] - $2070 = -$810 [323.4375 hours * Actual labour rate] = $1260 Actual labour rate = $1260 / 323.4375 hours = $3.90 Answer d Labour spending variance = [Actual labour hours * Standard labour rate] - [Standard labour hours * standard labour rate] Standard Labour hours = 210 tune ups * 2 hours per tune up = 420 hours Labour spending variance = [Actual labour hours * $6.40] - [420 labour hours * $6.40] = -$618 [Actual labour hours * $6.40] - $2688 = -$618 Actual Labour hours * $6.40 = $2070 Actual Labour hours = 323.4375 hours

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