Oslund Company Manufactures Only One Product and Uses a Standard

question 70

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 for the units manufactured.

What were the total actual DLHs worked by Oslund Company during the past month, to the nearest whole number?

• A) 1,200.
• B) 3,000.
• C) 4,800.
• D) 6,000.
• E) 7,200.

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Definitions:

Quarter Income Statement

A financial report that summarizes the revenues, expenses, and profits or losses of a company over a three-month period.

Impairment Test

An examination to determine if an asset's carrying value exceeds its recoverable amount, indicating if the asset is impaired.

Future Cash Flows

Estimates of the amount of money expected to be received or paid out over future periods.

Asset

Resources owned or controlled by a business, expected to provide future economic benefits.