(Appendix 11A)The Claus Corporation Makes and Sells a Single Product

question 45

Multiple Choice

(Appendix 11A) 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

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Definitions:

Strategic Behavior

Actions taken by a firm that attempt to influence the future behavior of other firms.

Cartel

An alliance of firms that coordinate their actions to control the supply of a product or service, thus influencing the market price.

Marginal Cost

The hike in total costs linked to the creation of one more unit of a product or service.

Antitrust Legislation

Laws designed to promote market competition by regulating anti-competitive conduct by companies.