Response to the following 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
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.