Ackermans Garage uses standards to plan and control labor time and expense. The standard time for an

Question:

Ackerman’s Garage uses standards to plan and control labor time and expense. The standard time for an engine tune-up is 3.5 hours, and the standard labor rate is $15 per hour. Last week, 24 tune-ups were completed. The labor efficiency variance was 6 hours unfavorable, and the labor rate variance totaled $81 favorable.


Required:

a. Calculate the actual direct labor hourly rate paid for tune-up work last week.

b. Calculate the dollar amount of the labor efficiency variance.

c. What is the most likely explanation for these two variances? Is this a good tradeoff for the management of the garage to make? Explain your answer.

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Related Book For  book-img-for-question

Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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