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 Hours |
Standard Rate |
Standard Cost |
|
|
Motor tune-up |
1.50 |
$6.00 |
$9.00 |
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 150 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
|
Labor rate variance |
$ |
188 |
F |
|
Labor spending variance |
$ |
1,282 |
U |
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.)
| 1.Determine the number of actual labor-hours spent on tune-ups during the week. | ||||||||
| Effiency Variance = 188+1282 = 1470 | ||||||||
| Also, | Effiency Variance = SR(AH-SH) | |||||||
| 1470 = $6(AH - 150*1.50 hrs) | ||||||||
| 1470 = $6(AH - 225) | ||||||||
| 245 = AH -225 | ||||||||
| AH = 245+225 | ||||||||
| AH = 470 hrs | ||||||||
| Therfore, Actual hrs worked is 470 hrs | ||||||||
| 2.Determine the actual hourly rate of pay for tune-ups last week | ||||||||
| Rate Variance = AH(AR-SR) | ||||||||
| -188 = 470(AR-$6) | ||||||||
| -0.4 = AR - 6 | ||||||||
| Actual Rate = -0.4+6 | ||||||||
| Actual Rate =$ 5.6 per hr | ||||||||
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