Simplex Company has the following estimated costs for next year:

Direct materials

$15,000

Direct labour

55,000

Sales commissions

75,000

Salary of production supervisor

35,000

Indirect materials

5,000

Advertising expenses

11,000

Rent on factory equipment

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, what will be the overhead rate per hour?

a. $3.50.

b. $7.63.

c. $6.94.

d. $8.56.

16,000