The auto repair shop of Quality Motor Company uses standards to control the labo
ID: 2577428 • Letter: T
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:
Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.)
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:
Explanation / Answer
Labor efficiency variance = 829-318 = 1147 U 1 Labor efficiency variance = SR*(AH-SH) 1147 = 6.2*(AH-230*1.5)= 185 = AH-345 AH = 530 Actual labor-hours = 530 2 Labor rate variance = AH*(SR-AR) 318 = 530*(6.2-AR) 0.6 = 6.2-AR AR = 5.6 Actual hourly rate = $5.60
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