Question

Oslund Company manufactures only one product and uses a standard cost system. During the past month, the following variances were observed: Direct labor rate variance $30,000 favorable Direct labor efficiency variance 50,000 unfavorable Variable overhead efficiency variance 20,000 unfavorable Standard direct labor hours (DLH) per unit 5 Oslund applies variable overhead using a standard rate of $20 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 direct labor hours worked by Oslund Company during the past month

Answer 1

6,000 Hours

Step-by-step explanation:

Variable overhead efficiency variance = 20,000 U

(SH - AH) * SVR = - 20,000

Actual hours = Standard hours + 20% = 1.20*SH

(SH - (1.20SH) * 20 = - 20,000

-0.20 SH = -20,000/20

-0.20 SH = -1,000

SH = 5,000 Hours

Actual hours = 1.20 * 5,000 Hours

Actual hours = 6,000 Hours