Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Arco Inc.'s fixed overhead budget is $400,000; the standard fixed overhead rate is $5 per direct labor hour or $10 per unit of product. During the immediate past year Arco produced 45,000 units of product, incurred $385,000 of fixed overhead, and used 82,500 direct labor hours.
-What is the budgeted activity level on which Arco based its fixed overhead rate?

A) 90,000 direct labor hours
B) 82,500 direct labor hours
C) 80,000 direct labor hours
D) 70,000 direct labor hours