The auto body repair shop of Quality Motor Company uses standards to control the
ID: 2570938 • Letter: T
Question
The auto body 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 50 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.
Standard Hours Standard Rate Standard Cost Motor Tune-Up 2.5 $25.00 $62.50Explanation / Answer
Labor Efficiency variance =Spendig variance-Rate variance
= 200 -(-150)
=200+150
= 350 U
1)Labor efficiency variance =SR[AH-SH]
350 = 25 [AH-(50*2.5)]
350/25 = AH- 125
14+125=AH
Actual hours = 139 hours
2)Labor rate variance =AH[AR-SR]
-150 = 139[ar-25]
-150/139 = AR- 25
- 1.07914 =AR-25
AR =25-1.07914 = $ 23.92 per hour
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.