CR Company has the following estimated cost for the next year:
Direct Materials...........................................$4,000
Direct Labor................................................20,000
Rent on factory building.............................15,000
Sales salaries..............................................$25,000
Depreciation equipment.................................8,000
Indirect Labor..............................................10,000
Production supervisor salary........................12,000
CR Company estimates that 20,000 labor hrs will be worked during the year. If overhead is applied on the basis of direct labor hours, the overhead rate per hour will be
a. $2.25
b. $3.25
c. $3.45