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The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop
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: Standard Job Motor tune-up Standard Hours 1.50 Rate $6.20 Standard Cost $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: F Labor rate variance Labor spending variance $318 $829 Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week. Actual labor hours hours 2. Determine the actual hourly rate of pay for tune-ups last week. (Round your answer to 2 decimal places.) Actual hourly rate per hour
Expert Solution
Labour efficiency variance = 829+318 = 1,147 U
1) Labour efficiency variance = (Standard hour-actual hour) Standard rate
-1,147 = (230*1.5*6.2-6.2X)
-1,147 = 2,139-6.2X
6.2X = 3,286
X (actual hours) = 530 Hours
2) Labour price variance = (Standard rate-actual rate) actual hours
318 = (6.2*530-530X)
318 = 3,286-530X
530X = 3,286-318
530X =2,968
X (Actual rate per hour) = 5.6 per hour
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