Problem: 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 appear below:
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
Compute the predetermined overhead rate for the year.
Determine the amount of overhead that would be applied to the output of the period.