Question

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: Job Standard Hours Standard Rate Standard Cost Motor tune-up 2.5 $9.00 $22.50 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 50 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance $ 87 F Labor spending variance $ 93 U Required: 1. Determine the number of actual labor-hours spent on tune-ups during the week.

Answer 1

Answer:

The number of actual labor-hours spent on tune-ups during the week is 145 hours.

Explanation:

Labor efficiency variance

= Labor spending variance - labor rate variance

= 93 U - 87 F

= 180 U

(SH - AH) * SR = - 180

(2.5*50 - AH) * 9 = - 180

(125- AH) = - 20

AH = 145

Therefore, The number of actual labor-hours spent on tune-ups during the week is 145 hours.