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:

Job Standard Hours Standard Rate Standard Cost
Motor tune-up 1.50 $6.20 $9.30

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:

Labor rate variance $900 F
Labor spending variance $249 F
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.

Answer 1

Actual Hours Worked= 106.5

Actual Rate= $14.6

Step-by-step explanation:

Labor Spending Variance= Labor Efficiency Variance Labor Rate Variance

249= Labor Efficiency Variance 900

Labor Efficiency Variance= 249-900= (651)

Labor Efficiency variance= Actual Hours Worked * Standard Rate-Standard Hours Worked * Standard Rate

$651= Actual Hours Worked* $6.20-1.50* $6.20

$651= Actual Hours Worked* $6.20- 9.3

651+9.3/ 6.2= Actual Hours Worked

Actual Hours Worked= 106.5

Labor Rate Variance = Actual Hours Worked * Actual Rate- Actual Hours Worked * Standard Rate

$900 F = 106.5* Actual Rate- 106.5* $6.20

900 +660.3/ 106.5=Actual Rate

Actual Rate= $14.6