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Standard Cost System

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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

Compute the predetermined overhead rate for the year.
Determine the amount of overhead that would be applied to the output of the period.

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The solution shows the calculations of predetermined overhead rate for the year and the amount of overhead that would be applied to the output of the period.

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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 ...

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