Oslund Company Manufactures Only One Product and Uses a Standard

question 30

Multiple Choice

Oslund Company manufactures only one product and uses a standard cost system. During the past month, the following variances were observed: $\begin{array}{lc}\text { Direct labor rate variance } & \$ 30,000 \text { favorable } \\\text { Direct labor efficiency variance } & 50,000 \text { unfavorable } \\\text { Variable overhead efficiency variance } & 20,000 \text { unfavorable } \\\text { Standard direct labor hours (DLH) per unit of output } & 5.00\end{array}$ Oslund applies variable overhead using a standard rate of $20.00 per standard DLH allowed. During the month, Oslund used 20% more DLHs than the total standard hours allowed for the units manufactured.

What were the total standard DLHs (to the nearest whole number) for the units manufactured by Oslund Company during the past month?

• A) 1,000.
• B) 2,500.
• C) 4,000.
• D) 5,000.
• E) 6,000.

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Definitions:

Level Schedules

Scheduling products so that each day’s production meets the demand for that day.

Small Batches

The production strategy involving the manufacture of small quantities of items to reduce costs and increase efficiency in response to specific demands.

Large Batches

Production method where goods are manufactured in significantly large quantities at once, often leading to economies of scale but increased inventory.

JIT Partnerships

Collaborations between suppliers and manufacturers to implement Just-In-Time inventory strategies, minimizing stock levels and reducing waste.