The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company:
Direct manufacturing labor use 0.02 hours per baguetteVariable manufacturing overhead $10.00 per direct manufacturing labor-hourThe Sourdough Bread Company provides the following additional data for the year ended December 31, 2017:Planned (budgeted) output 3,100,000 baguettesActual production 2,600,000 baguettesDirect manufacturing labor 46,800 hoursActual variable manufacturing overhead $617,760What is the denominator level used for allocating variable manufacturing' overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)
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