Davis Company has analyzed its overhead costs and derived a general formula for their behavior: $65,000 + $14 per direct labor hour employed. The company expects to use 50,000 direct labor hours during the next accounting period. What overhead rate per direct labor hour should be applied to jobs worked during the period?

$15.3 per direct labor hour

Explanation:

Overhead costs are those costs which are incurred for the manufacturing of the product but not directly attributable to any product / service. It can be variable or fixed.

Formula for overhead costs = $65,000 + $14 per direct labor hour

Numbers of direct labor hours = 50,000 hours

Total Cost = $65,000 x ($14 x 50,000 ) = $765,000

Over head rate per direct labor hour  = Total overhead cost / Numbers of direct labor hours = $765,000 / 50,000 = $15.3 per direct labor hour

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.