Question
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
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.
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