Application of Overhead Norton Associates is an advertising agency in Austin, Texas. The company’s controller estimated that it would incur $325,000 in overhead costs for the current year. Because the...

Application of Overhead Norton Associates is an advertising agency in Austin, Texas. The company’s controller estimated that it would incur $325,000 in overhead costs for the current year. Because the overhead costs of each project change in direct proportion to the amount of direct professional hours incurred, the controller decided that overhead should be applied on the basis of professional hours. The controller estimated 25,000 professional hours for the year. During October, Norton incurred the following costs to make a 20-second TV commercial for Central Texas Bank:

Required 1. Compute the predetermined overhead rate. 2. What is the total amount of the bill that Norton will send Central Texas Bank?