Problem
Predetermined Overhead Rate, Overhead Application
At the beginning of the year, Ilberg Company estimated the following costs:
Overhead $416,000
Direct labor cost 520,000
Ilberg uses normal costing and applies overhead on the basis of direct labor cost. (Direct labor cost is equal to total direct labor hours worked multiplied by the wage rate.) For the month of December, direct labor cost was $43,700.
Required:
1. Calculate the predetermined overhead rate for the year. Enter the percentage as a whole number.
2. Calculate the overhead applied to production in December.