Santos garage uses time and materials pricing. It is setting prices for next year using the following information:

Labor rate, including fringe benefits	$	58	per hour
Annual labor hours		3,000	hours
Annual materials purchases	$	826,000
Materials purchasing, handling, and storage	$	47,000
Overhead for depreciation, taxes, insurance, etc.	$	66,000
Target profit margin for both labor and materials		25	%

What should Santos set as the direct labor rate per hour?

• $80 per hour.

• $58 per hour.

• $78 per hour.

• $116 per hour.

• $100 per hour.