Calculating Standard Quantities for Actual Production Guillermo\'s Oil and Lube

Question

Calculating Standard Quantities for Actual Production

Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 27 minutes and 6.3 quarts of oil are used. In June, Guillermo's Oil and Lube had 960 oil changes.

Required:

1. Calculate the number of quarts of oil that should have been used (SQ) for 960 oil changes.

_________quarts

2. Calculate the hours of direct labor that should have been used (SH) for 960 oil changes.

_________direct labor hours

3. What if there had been 950 oil changes in June? Would the standard quantities of oil (in quarts) and of direct labor hours be higher or lower than the amounts calculated in Requirements 1 and 2?

Lower

What would the new standard quantities be? Round your answers to two decimal places.

SQ ________quarts

SH_________ direct labor hours

Explanation / Answer

1) Standard quantity = 960*6.3 = 6048 quarts

2) Standard hour = 960*27/60 = 432 hours

3) Standard quantity = 950*6.3 = 5985 quarts

Standard hour = 950*27/60 = 427.50 hours

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