### Quality Motor Company: Labor Time and Cost Control Analysis**Overview:**Quality Motor Company is an auto repair shop that uses standard costing methods to manage labor time and labor costs effectively. Below is the standard labor cost information for a motor tune-up:- **Motor Tune-Up:** - **Standard Hours:** 2.50 - **Standard Rate:** $38.00 - **Standard Cost:** $95.00However, the record of time spent on motor tune-ups last week has been misplaced. The shop supervisor recollects that 58 tune-ups took place during the week, and the following variance data is noted by the controller:- **Labor Rate Variance:** $450 F (Favorable)- **Labor Spending Variance:** $500 U (Unfavorable)**Required Calculations:**1. **Determine the Number of Actual Labor-Hours Spent on Tune-Ups During the Week:** - Use the given variances to calculate the total actual labor-hours.2. **Determine the Actual Hourly Pay Rate for Tune-Ups Last Week:** - Calculate using the provided variances and the number of tune-ups.**Calculation Table:**| 1. Actual Labor Hours | ______ hours ||-------------------------|---------------|| 2. Actual Hourly Rate | ______ per hour |**Instructions:**- Provide your answers rounded to two decimal places.

Direct labour spending variance: direct labour variance is variance analysis done by the company to know the difference between the actual labour used and the labour that should be used (standard) Equation for direct labour spending variance = (actual Rate * actual hours) – (standard rate * standard hours) or = actual cost – standard cost Direct labour rate variance: it is a variance analysis done by the company to know the rate variation between the budged or estimated and what happened Equation for direct labour rate variance = (Actual rate – standard rate) * actual hours Direct labour efficiency variance or direct labour quantity variance: it is the analysis done by the company to know the difference between hours used and the estimated hours that should be used for production The equation for direct labour efficiency variance = (actual hours – standard hours) * standard rate If the actual result (rate/hours) is higher than the Standard (rate/hours) then it is an Unfavourable “U” variance If the actual result (rate/hours) is lesser than the standard (rate/hours) then it is a Favourable “F” variance If the actual result (rate/hours) and the Standard (rate/hours) are equal then there is no variance “None” Actual labour hours =170 hours Actual labour hourly rate = $ 35.35 per hourStandard rate = 38 Standard hours = tune ups completed * standard hour per tune ups = 58 * 2.5 = 145 hours Direct labour spending variance = (actual labour hours * actual labour hourly rate) – (standard labour hours * standard rate) 500 U = (actual labour hours * actual labour hourly rate) – (145 * 38) 500 + 5510 = (actual labour hours * actual labour hourly rate) 6,010 = (actual labour hours * actual labour hourly rate) Direct labour rate variance = (actual labour rate – standard rate) * actual hours 450F = (actual labour hours * actual labour hourly rate) - (actual labour hours * standard labour hourly rate) Which means -450 = (actual labour hours * actual labour hourly rate) - (actual labour hours * standard labour hourly rate) -450 = 6,010 – (actual labour hours * 38) - 450 – 6,010 = - (actual labour hours * 38) - 6460 = - (actual labour hours * 38) Changing sign 6,460 = actual labour hours * 38 1. Actual labour hours = 6,460 / 38 = 170 hours 6,010 = actual labour hours * actual labour hourly rate 6,010 = 170 * actual labour hourly rate 2. Actual labour hourly rate = 6,010 / 170 = $ 35.35 per hour

Answered: Determine the number of actual…

Business

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Determine the number of actual labor-hours spent on tune-ups during the week E Determine the actual hourly pay rate for tune-ups last week. (Round your answer to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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### Quality Motor Company: Labor Time and Cost Control Analysis

**Overview:**
Quality Motor Company is an auto repair shop that uses standard costing methods to manage labor time and labor costs effectively. Below is the standard labor cost information for a motor tune-up:

- **Motor Tune-Up:**
- **Standard Hours:** 2.50
- **Standard Rate:** $38.00
- **Standard Cost:** $95.00

However, the record of time spent on motor tune-ups last week has been misplaced. The shop supervisor recollects that 58 tune-ups took place during the week, and the following variance data is noted by the controller:

- **Labor Rate Variance:** $450 F (Favorable)
- **Labor Spending Variance:** $500 U (Unfavorable)

**Required Calculations:**

1. **Determine the Number of Actual Labor-Hours Spent on Tune-Ups During the Week:**
- Use the given variances to calculate the total actual labor-hours.

2. **Determine the Actual Hourly Pay Rate for Tune-Ups Last Week:**
- Calculate using the provided variances and the number of tune-ups.

**Calculation Table:**

| 1. Actual Labor Hours | ______ hours |
|-------------------------|---------------|
| 2. Actual Hourly Rate | ______ per hour |

**Instructions:**
- Provide your answers rounded to two decimal places.

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