Wiley Company produces lawn mowers. The deluxe model has a sturdier frame, a higher horsepower engine, a wider blade and mulching capability. The following estimates were prepared at the beginning of the year: Ex ected uan Selli Direct labor and direct materials costs Machine hours Direct labor hours Basic Model Deluxe Model 20 occ 80 6 occ 20 occ ld OOC 360 4 ooc 10 ooc Total 30 coo 10 coo 30 coo Overhead costs for the year are predicted to be $600,000. 3. Using direct labor hours as the base (cost driver) for total annual overhead a. Calculate the predetermined overhead rate for the year b. Estimate the total product cost for each model. Using machine hours as the base (cost driver) for total annual overhead a. Calculate the predetermined overhead rate for the year b. Estimate the total product cost for each model. Assume that direct labor hours was the chosen cost driver. In January 2,000 basic models are built and sold and it takes 2,100 labor hours. Actual cost of DM and DL in January is $165,000. a. What is cost of goods sold for January? b. Assume actual overhead costs in January are $800 more than the overhead charged (or applied) to the products built in January? What would cause a difference like that? What would a company do with that variance?