Monte Services, Inc. is trying to establish the standard labor cost of a typical
ID: 2468162 • Letter: M
Question
Monte Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. Determine the standard direct labor hours per oil change. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor hours per oil change hours Determine the standard direct labor hourly rate. (Round answer fo 2 decimal places, e.g. 1.25.) Standard direct labor hourly rate $ Determine the standard direct labor cost per oil change. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor cost per oil change $ If an oil change took 5.6 hours at the standard hourly rate, what was the direct labor quantity variance? (Round answer to 2 decimal places, e.g. 1.25.) Direct labor quantity variance $Explanation / Answer
Actual time spent on the oil change 5 hour Hourly wage rate $12 Payroll taxes 15% of wage rate Setup and downtime 5% of actual labor time Cleanup and rest periods 31% of actual labor time Fringe Benefits 25% of wage rate Standard direct labor hours per oil change Actual time spent on the oil change 5 hour Setup and downtime 5% of actual labor time .25 hour Cleanup and rest periods 31% of actual labor time 1.55 hour Standard direct labor hours per oil change 6.80 hours Standard direct labor hourly rate Hourly wage rate $12 Payroll taxes 15% of wage rate 1.8 Fringe Benefits 25% of wage rate 3 Standard direct labor hourly rate 16.8 Standard Direct labour cost per oil change is Standard direct labor hours per oil change 6.8 hours Standard direct labor hourly rate 16.8 Standard Direct labor cost per oil change is 16.8*6.8 114.24 Labor quantity Variance Actual hours Standard Hours Standard rate SH-AH Variance (SH-AR)*SR 5.6 6.8 16.8 1.20 $20.16 F