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		5 hours
Hourly wage rate		$15
Payroll taxes		20% of wage rate
Setup and downtime		7% of actual labor time
Cleanup and rest periods		35% of actual labor time
Fringe benefits		20% of wage rate

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

Type your answer here

hours

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

Standard direct labor hourly rate

$Type your answer here

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

$Type your answer here

If a brake repair took 5.60 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

$Type your answer here

Choose your answer here                                                                      FavorableNeither favorable nor unfavorableUnfavorable

Answer 1

1.

Compute standard direct labor hours per brake repairs as follows:

Particulars	Amount
Actual service time	5.0 hours
Setup and downtime (5 hour * 7%)	0.35hours
Cleanup and rest periods (5 hour * 35%)	1.75 hours
Standard direct labor hours per brake repair	7.1 hours

2.

Compute standard direct labor hourly rate as follows:

Particulars	Amount
Hourly wage rate	$15
Payroll taxes ($15 * 20%)	$3
Fringe benefits ($15 * 20%)	$3
Standard direct labor hourly rate	$21

3.

Compute standard direct labor cost per brake repairs as follows:

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

= 7.10 hours * $21

= $149.10

4.

Compute direct labor quantity variance as follows:

Direct labor quantity variance = (Actual hours - Standard hours) * Standard rate

= (5.60 - 7.10) * $21

= $31.5 favorable