Chapter 10 Asignment 16 The auto repair shop of Quality Motor Company uses stand

Question

Chapter 10 Asignment 16 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 20 points Cost $12.80 Motor tune-up 2.00 $6.40 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 210 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance 240 F Required: . 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

1. Labour efficiency variance = Labour spending variance - labour rate variance

= $240F - $816F

= $576U

Labour rate variance = Actual Hours * (Actual rate - Standard rate)

-$816 = Actual hours (Actual rate - $6.40)

Labour efficiency variance = Standard rate * (Actual hours - Standard hours)

$576 = $6.40 * (Actual hours- (210*2))

90 = Actual hours - 420

Actual hours = 420 + 90 = 510

Actual hours = 510 hours

2. Labour rate variance = Actual Hours * (Actual rate - Standard rate)

-$816 = 510 (Actual rate - $6.40)

-$1.60 = Actual rate - $6.40

Actual rate = $6.40 - $1.60

Actual rate = $4.80

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