Question

In: Accounting

I CANNOT FIGURE THIS OUT FOR THE LIFE OF ME. *(It's not 570 actual labor hours;...

I CANNOT FIGURE THIS OUT FOR THE LIFE OF ME. *(It's not 570 actual labor hours; I keep getting that)*

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	2.60	$4.00	$10.40

The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 180 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:


Labor rate variance	$	408	U
Labor spending variance	$	576	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.)

Expert Solution

Labour efficiency variance = 408 U+576 U = 168 U

Labour efficiency variance = (Standard hours-actual hours)standard rate

-168 = (180*2.60*4-4X)

-168 = 1872-4X

4X = 2040

X(actual hours) = 510 hours

Labour rate variance = (Standard rate-actual rate) actual hours

-408 = (4*510-510X)

-408 = 2040-510X

510X = 2448

X(actual rate) = 4.80

ekkarill92 answered 1 year ago

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