
Managerial Accounting: E25-4 Monte Services, Inc. is trying to establish the standard labor cost
Managerial Accounting
Exercise 25-4 Compute labor quantity variance
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.
Actual time spent on the oil change 2.00 hour
Hourly wage rate $14
Payroll taxes 14% of wage rate
Setup and downtime 6% of actual labor time
Cleanup and rest periods 34% of actual labor time
Fringe benefits 27% of wage rate
Required:
a. Determine the standard direct labor hours per oil change. (Round answer to 2 decimal places, e.g. 1.25.)
b. Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 1.25.)
c. Determine the standard direct labor cost per oil change. (Round answers to 2 decimal places, e.g. 1.25.)
d. If an oil change took 2.6 hours at the standard hourly rate, what was the direct labor quantity variance? (Round answers to 2 decimal places, e.g. 1.25.)
Exercise 25-4 Compute labor quantity variance
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.
Actual time spent on the oil change 2.00 hour
Hourly wage rate $14
Payroll taxes 14% of wage rate
Setup and downtime 6% of actual labor time
Cleanup and rest periods 34% of actual labor time
Fringe benefits 27% of wage rate
Required:
a. Determine the standard direct labor hours per oil change. (Round answer to 2 decimal places, e.g. 1.25.)
b. Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 1.25.)
c. Determine the standard direct labor cost per oil change. (Round answers to 2 decimal places, e.g. 1.25.)
d. If an oil change took 2.6 hours at the standard hourly rate, what was the direct labor quantity variance? (Round answers to 2 decimal places, e.g. 1.25.)
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