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 | 2.10 | $6.50 | $13.65 |
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 140 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
| Labor rate variance | $ | 611 | F |
| Labor spending variance | $ | 533 | 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.)
| Std Hours required for actual tune-up (140*2.10): 294 hours | ||||||
| Std rate per hour: $ 6.50 per hour | ||||||
| Labour Spending variance: 533 U | ||||||
| labor rate variance: 611 F | ||||||
| Labour efficiency variance:1144 U (Labour spending -Labour rate) | ||||||
| Labour efficiency variance: Std rate (Std hours-Actual hours) | ||||||
| 1144 U = | 6.50 (294 - Actual hours) | |||||
| Actual hours = 470 hours | ||||||
| Labour rate variance = Actual hours (Std rate-Actual rate) | ||||||
| 611 F = 470 (6.50 - Actual rate per hour) | ||||||
| Actual rate per hour = 5.20 per hour | ||||||
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