Warner Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year.

Budgeted Actual Overhead cost $1,000,000 $950,000 Machine hours 50,000 45,000 Direct labor hours 100,000 92,000 Overhead is applied on the basis of direct labor hours.

(a) Compute the predetermined overhead rate.

(b) Determine the amount of overhead applied for the year.

(c) Explain how an activity-based costing system might differ in terms of computing a predetermined overhead rate.

AppendixLO1