Simplex Company Has the Following Estimated Costs for Next Year

Multiple Choice

Simplex Company has the following estimated costs for next year: $\begin{array}{llcc} \text { Direct materials............................... } &\$15,000\\ \text {Direct labor..................................... } &\$55,000\\ \text { Sales commissions.......................... } &\$75,000\\ \text { Salary of production supervisor....... } &\$35,000\\ \text { Indirect materials........................... } &\$5,000\\ \text {Advertising expense........................ } &\$11,000\\ \text { Rent on factory equipment............} &\$16,000\\\end{array}$
Simplex estimates that 10,000 direct labor 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) $7.63
C) $6.94
D) $3.50