The Chuba Corporation Uses a Standard Cost System in Which

Multiple Choice

The Chuba Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours (DLHs) . During December, the company actually used 7,200 direct labor-hours and made 1,900 units of finished product. The standard cost card for one unit of product includes the following data concerning manufacturing overhead: Variable overhead: 4 DLHs @ $5.25 per DLH
Fixed overhead: 4 DLHs @ $2.00 per DLH
For December, the company incurred $16,550 in fixed manufacturing overhead costs and recorded an $800 unfavorable volume variance.
The denominator activity level in direct labor-hours used by Chuba in setting the predetermined overhead rate was:

A) 7,600 hours
B) 7,800 hours
C) 8,000 hours
D) 7,200 hours