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 2.50 $36.00 $90.00
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 230 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
Labor rate variance $ 900 F
Labor spending variance $ 249 F
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.)

Instructions are below.

Explanation:

Giving the following information:

Standard Hours Standard Rate Standard Cost

Motor tune-up 2.50 $36.00 $90.00

230 tune-ups were completed during the week

Labor rate variance $ 900 F

Labor spending variance of $ 249 F

1) First, we need to calculate the actual hours:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

249= (2.5*230 - actual quantity)*36

249= 20,700 - 36AQ

-20,451= -36AQ

20,451/36= Actual quantity

568= actual quantity

2) We need to calculate the actual rate:

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

900= (36 - Actual Rate)*568

900= 20,448 - 568Actual Rate

19,548/568= Actual Rate

$34.42= Actual Rate

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