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CR Company has the following estimated costs for the next year:
Direct materials $4,000
Direct labour 20,000
Rent on factory building 15,000
Sales salaries 25,000
Depreciation on factory equipment 8,000
Indirect labour 10,000
Production supervisor's salary 12,000
Problem 1: CR Company estimates that 20,000 labour hours will be worked during the year. If overhead is applied based on direct labour hours, the overhead rate per hour will be?
Option 1: $3.25.
Option 2: $2.25.
Option 3: $3.45.
Option 4: $4.70.
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