Henley Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours. For the month of January, the fixed manufacturing overhead volume variance was $2,220 favorable. The company uses a fixed manufacturing overhead rate of $1.85 per direct labor-hour. During January, the standard direct labor-hours allowed for the month's output:
A) exceeded denominator hours by 1,000.
B) fell short of denominator hours by 1,000.
C) exceeded denominator hours by 1,200.
D) fell short of denominator hour by 1,200.

Question

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The Answer of Henley Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours. For the month of January, the fixed manufacturing overhead volume variance was $2,220 favorable. The company uses a fixed manufacturing overhead rate of $1.85 per direct labor-hour. During January, the standard direct labor-hours allowed for the month's output:
A) exceeded denominator hours by 1,000.
B) fell short of denominator hours by 1,000.
C) exceeded denominator hours by 1,200.
D) fell short of denominator hour by 1,200.

Henley Company Uses a Standard Cost System in Which It