The auto repair shop of Quality Motor Company uses standards to control the labo
ID: 2582262 • 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 200 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.)
Standard Hours Standard Rate Standard Cost Motor tune-up 1.90 $6.60 $12.54Explanation / Answer
Labor efficiency variance = 980-254=726U 1 Labor efficiency variance = SR*(AH-SH) 726 = 6.6*(AH-200*1.9) 726 = 6.6*(AH-380) 110 = AH-380 AH = 490 Number of actual labor-hours = 490 2 Labor rate variance =AH*(SR-AR) 980 = 490*(6.6-AR) 2 = 6.6-AR AR = 4.6 Actual hourly rate of pay = $4.60
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