ost for a motor tune-up is given below: Standard Hours Standard Rate Standard Cost Motor tune-up 2.50 $ 33.00 $ 82.50 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 58 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance $ 80 F Labor spending variance $ 118 U
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Quality Motor Company is an auto repair shop that uses standards to control its labor time and labor cost. The
| Standard Hours | Standard Rate | Standard Cost | |
|---|---|---|---|
| Motor tune-up | 2.50 | $ 33.00 | $ 82.50 |
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 58 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
| Labor rate variance | $ 80 | F |
|---|---|---|
| Labor spending variance | $ 118 | U |
Required:
- Determine the number of actual labor-hours spent on tune-ups during the week.
- Determine the actual hourly pay rate for tune-ups last week
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