The Claus Corporation Makes and Sells a Single Product and Uses

Multiple Choice

The Claus Corporation makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labor-hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following:

Variable factory overhead: 3.0 DLHs @ $4.00 per DLH.
Fixed factory overhead: 3.0 DLHs @ $3.50 per DLH.

For January, the company incurred $22,000 of actual fixed manufacturing overhead costs and recorded a $875 favorable volume variance.

-The denominator level of activity in direct labor-hours (DLHs) used by Claus in setting the predetermined overhead rate for January is:

A) 9,500 DLHs
B) 9,250 DLHs
C) 8,750 DLHs
D) 10,500 DLHs