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Question(s) / Instruction(s):

Alpha Co. has the following estimated costs for next year:

Direct materials                                                                $ 6,000

Direct labor                                                         20,000

Rent on factory building                                                15,000

Sales salaries                                                      25,000

Amortization on factory equipment        8,000

Indirect labor                                                     12,000

Production supervisor\'s salary                    15,000

Alpha estimates that 20,000 direct labor-hours will be worked during the year. If manufacturing overhead is applied on the basis of direct labor-hours, what will be the overhead rate per hour?

a.            $2.50

b.            $3.50

c.             $3.75

d.            $5.05

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