Johnson Auto Body uses a job order cost system. Overhead is applied to jobs on the basis of direct labor hours. During the current period, Job No.

Johnson Auto Body uses a job order cost system. Overhead is applied to jobs on the basis of direct labor hours. During the current period, Job No. 337 was charged $425 in direct materials, $475 in direct labor, and $190 in overhead. If direct labor costs an average of $16 per hour, the company's overhead application rate is: A) $7.27 per direct labor hour. B) $6.40 per direct labor hour. C) $17.50 per direct labor hour. D) $40 per direct labor hour.