2 (a) Taperno Manufacturing Company has made the following cost estimates for next year:

Direct Labor $90,000

Direct materials 72,000

Indirect labor 19,200

Indirect materials 8,400

Depreciation - factory building 8,200

Depreciation - factory machinery 4,200

Depriciation - office equipment 500

Factory utilities 4,900

Factory property taxes 3,100

Selling expenses 25,000

Miscellaneous overhead costs 5,600

General and administrative expenses 19,000

The company applies overhead based on direct labor hours. The estimated direct labor hours for next year are 16,000 hours.

Compute the overhead application rate that will be used to apply overhead during the next year (10 points).