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 24 minutes and 6.2 quarts of oil are used. In June, Guillermo’s Oil and Lube had 980 oil changes.
Required:
1. Calculate the number of quarts of oil that should have been used (SQ) for 980 oil changes.
2. Calculate the hours of direct labor that should have been used (SH) for 980 oil changes.
3. What if there had been 970 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? What would the new standard quantities be?