Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow:

Bike parts ............ $ 350,000

Factory machinery depreciation .... 55,000

Factory supervisor salaries ...... 140,000

Factory direct labor ........ 300,000

Factory supplies .......... 7,500

Factory property tax ....... 37,500

Advertising cost .......... 14,500

Administrative salaries ....... 80,000

Administrative-related depreciation .. 16,000

Total expected costs ....... $1,000,500

Required:

1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $15 per hour.

2. Determine the amount of applied overhead if 18,500 actual hours are worked in the upcoming year.