Question

Monte Services, Inc. is trying to establish the standard labor cost of a typical brake repair. The following data have been collected from time and motion studies conducted over the past month.

Actual time spent on the brake repairs		4 hours
Hourly wage rate		$14
Payroll taxes		20% of wage rate
Setup and downtime		10% of actual labor time
Cleanup and rest periods		30% of actual labor time
Fringe benefits		25% of wage rate

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Determine the standard direct labor hours per brake repairs. (Round answer to 2 decimal places, e.g. 1.25.)

Standard direct labor hours per brake repair

hours

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Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 1.25.)

Standard direct labor hourly rate

$

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Determine the standard direct labor cost per brake repair. (Round answer to 2 decimal places, e.g. 1.25.)

Standard direct labor cost per brake repair

$

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If a brake repair took 4.60 hours at the standard hourly rate, what was the direct labor quantity variance? (Round answer to 2 decimal places, e.g. 1.25.)

Direct labor quantity variance

$

Neither favorable nor unfavorableFavorableUnfavorable

Answer 1

Solution:

1)

Calculate standard direct labor hours per brake repair.

	Hours
Actual time spent on the brake repair	$4
Setup and down time($4*10%)	$0.4
Cleanup and rest periods($4*30%)	$1.2
Standard direct labor hour per brake repair	$5.6

2)

Standard direct labor hourly rate = Hourly wage rate + payroll taxes + fringe benefits

=$14+($14*20%)+($14*25%)

=$14+$2.8+$3.5

=$20.3

3)

Standard direct labor cost per brake repair = Standard direct labor hour per brake repair *Standard direct labor hourly rate

=$5.6*$20.3

=$113.68

4)

If a brake repair took 4.6 hours, direct labor quantity variance = (Actual quantity of input used - budgeted quantity of input allowed for actual output) * budgeted price of input

=(4.6 - 5.6)*20.3

=(20.3) unfavorable

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