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:

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:

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.)

Explanation / Answer

Labour efficiency variance = 408F+615U = 1023 U

Labour efficiency variance = (standard hour-actual hour)Standard rate

-1023 = (230*1.5-X)6.20

-1023 = 2139-6.20X

6.20X = 3162

X(actual hour) = 510 hour

Labour rate variance = (Standard rate-actual rate)actual hour

408 = (6.20-X)510

408 = 3162-510X

510X = 2754

X(actual rate) = 5.4 per hour

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