The correct answer is: D. both a and b
Direct manufacturing labor-hours and setup labor-hours are both cost drivers for manufacturing overhead costs.
A cost driver is a factor that causes a change in the cost of an activity. In manufacturing, overhead costs are the costs of production that are not directly attributable to a specific product or service. These costs include indirect labor, indirect materials, and factory overhead.
Direct manufacturing labor-hours are a common cost driver for manufacturing overhead costs. This is because the amount of direct labor used in a product is often a good indicator of the amount of overhead costs that will be incurred. For example, if a product requires more direct labor to produce, it will likely also require more indirect labor, such as supervision and maintenance.
Setup labor-hours are another common cost driver for manufacturing overhead costs. This is because the amount of time it takes to set up a machine for production can also be a good indicator of the amount of overhead costs that will be incurred. For example, if a product requires a more complex setup, it will likely also require more indirect labor, such as material handling and quality control.
In addition to direct manufacturing labor-hours and setup labor-hours, other possible cost drivers for manufacturing overhead costs include machine-hours, production runs, and number of products produced. The specific cost drivers that are used will vary depending on the type of manufacturing process and the products being produced.