Exercise 203 Engines Done Right Co. is trying to establish the standard labor co

Question

Exercise 203 Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month Actual time spent on the tune-up 1.0 hour Hourly wage rate Payroll taxes Setup and downtime Cleanup and rest periods Fringe benefits $16 10% of wage rate 10% of actual labor time 20% of actual labor time 25% of wage rate Determine the standard direct labor hours per tune-up. (Round answer to 1 decimal place, e.g. 15.2.) Standard direct labor hours per tune-up hours Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 15.25.) Sandard direct labor houty rate Determine the standard direct labor cost per tune-up. (Round answer to 2 decimal places, e.g. 15.25.) Sandard direcr lbor co per ol hange y l © 2000-2018 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons Inc

Explanation / Answer

a Actual service time 1 Setup and downtime 0.1 Cleanup and rest periods 0.2 Standard direct labor hours per tune-up 1.3 b Hourly wage rate 16 Payroll taxes 1.6 Fringe benefits 4 Standard direct labor hourly rate 21.6 c Standard direct labor cost per oil change 28.08 =1.3*21.6 d Direct labor quantity variance=21.6*(1.3-1.5)= $4.32 U

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