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:
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Variable overhead cost per direct labor-hour
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$3.50
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Total fixed overhead cost per year
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$600,000
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Budgeted standard direct labor-hours (denominator level of activity)
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80,000
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Actual direct labor-hours
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84,000
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Standard direct labor-hours allowed for the actual output
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82,000
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Q1. Compute the predetermined overhead rate for the year.
Q2. Determine the amount of overhead that would be applied to the output of the period.