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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 $17 per hour. Last week, 23 tune-ups were completed. The labor efficiency variance was 14 hours unfavorable, and the labor rate variance totaled $81 favorable.
Required: Calculate the actual direct labor hourly rate paid for tune-up work last week. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
- Calculate the dollar amount of the labor efficiency variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
- Less skilled, lower paid workers took longer than standard to get the work done is the most likely explanation for these two variances.
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