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 DLHFixed overhead: 4 DLHs @ $2.00 per DLHFor 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. 7,800 hours
B. 8,000 hours
C. 7,200 hours
D. 7,600 hours
Answer: B
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