Simplex Company Has the Following Estimated Costs for Next Year

Multiple Choice

Simplex Company has the following estimated costs for next year: $$\begin{array} { | l | l | } \hline \text { Direct materials } & \$ 15,000 \\\hline \text { Direct labour } & 55,000 \\\hline \text { Sales commissions } & 75,000 \\\hline \text { Salary of production supervisor } & 35,000 \\\hline \text { Indirect materials } & 5,000 \\\hline \text { Advertising expense } & 11,000 \\\hline \text { Rent on factory equipment } & 16,000 \\\hline\end{array}$$ Simplex estimates that 10,000 direct labour and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the overhead rate per hour will be:

A) $8.56.
B) $3.50.
C) $7.63.
D) $6.94.