AutoAnswer, Inc., a manufacturer of telephone answering machines, uses a factory overhead applied rate to charge overhead costs to its manufactured products.

The company manager estimates that AutoAnswer will manufacture 30,000 units next year. For this amount of production, the cost accountant estimates total factory overhead costs to be \($336,000.00.\) Estimated direct labor cost for next year is \($420,000.00.\)

Instructions:

Calculate AutoAnswer’s factory overhead applied rate for next year as a percentage of direct labor cost.