Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the tune-up             1.0 hour Hourly wage rate                                        $16 Payroll taxes                                                10% of wage rate Setup and downtime                                   10% of actual labor time Cleanup and rest periods                             20% of actual labor time Fringe benefits                                              25% of wage rate If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance? Identify whether the variance is favorite or unfavorite?

Question

Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month.

Actual time spent on the tune-up             1.0 hour

Hourly wage rate                                        $16

Payroll taxes                                                10% of wage rate

Setup and downtime                                   10% of actual labor time

Cleanup and rest periods                             20% of actual labor time

Fringe benefits                                              25% of wage rate

If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance? Identify whether the variance is favorite or unfavorite?

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