Arabica Manufacturing Company Uses a Predetermined Manufacturing Overhead Rate Based

Arabica Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2012, they estimated total manufacturing overhead costs at $1,050,000, and they estimated total direct labor costs at $840,000. What was the predetermined manufacturing overhead rate?

A) 80% of direct labor cost
B) $1.25 per direct labor hour
C) 125% of direct labor cost
D) $35.00 per direct labor hour