Megan,Incuses the Following Standard Costs Per Unit for One of Its

question 86

Multiple Choice

Megan,Inc.uses the following standard costs per unit for one of its products: Direct labor (2 hrs @ $5/hr) = $10;overhead (2 hrs @ $2.50/hr) = $5.The flexible budget for overhead is $120,000 plus $1 per direct labor hour (DLH) .Actual data for the month show total overhead costs of $225,000,total fixed overhead of $123,000,85,000 hours worked,and 40,000 units produced.What is the budgeted denominator activity level in direct labor hours?

• A)24,000.
• B)48,000.
• C)60,000.
• D)80,000.
• E)100,000.

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Definitions:

Cutoff Rate

A specific point or standard used for decision-making, often concerning the minimum accepted return on investment.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Capital Project

A long-term, capital-intensive investment project with a purpose to build upon, add to, or improve a capital asset.