Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $355,200; materials of $412,000 and direct labor of $222,000. During the year Adams incurred $422,000 in materials costs, $418,500 in overhead costs and $226,000 in direct labor costs. Compute the overhead application rate.

Multiple Choice

• 185%.

• 160%.

• 86%.

• 63%.

• 186%.