and cost drivers. Direct labor hours are estimated at 100000 for the year. The following information is available regarding activity cost pools, cost drivers, total estimated overhead costs, and estimated use of activities per product:

Activity Cost Pool		Cost Driver		Est. Overhead		Cost Driver Activity
Ordering and Receiving		Orders		$ 80000		500	orders
Machine Setup		Setups		256500		450	setups
Machining		Machine hours		1387500		125000	MH
Assembly		Parts		1260000		1000000	parts
Inspection		Inspections		310000		500	inspections

If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is

$13.88.

$8.89.

$12.60.

$32.94.