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Question - Mosbach Corporation has a standard cost system In which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period, Data concerning the most recent year are as follows:
Variable overhead cost per direct labor-hour $3.50
Total fixed overhead cost per year $600,000
Budgeted standard direct labor-hours (denominator level of activity) 80,000
Actual direct labor-hours 84,000
Standard direct labor-hours allowed for the actual output 82,000
Required -
1. Compute the predetermined overhead rate for the year.
2. Determine the amount of overhead that would be applied to the output of the period.
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