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.