Final answer:
To determine the overhead cost for a job, calculate the overhead rate per hour and multiply by the job's labor hours. For K&N Jewelry Shop, with an overhead rate of $6 per hour and a job that takes 40 hours, the overhead cost is $240.
Step-by-step explanation:
The student has posed a question related to the calculation of overhead cost for a job based on estimated direct labor hours. To solve this, one must first determine the overhead rate per direct labor hour by dividing the total estimated overhead cost by the total estimated direct labor hours. The formula is as follows:
Overhead Rate = Total Overhead Cost / Total Direct Labor Hours
Using the figures provided:
Overhead Rate = $18,000 / 3,000 hours = $6 per direct labor hour
Next, to find the overhead cost for one job that requires 40 direct labor hours, we multiply the overhead rate by the number of labor hours:
Overhead Cost for the Job = Overhead Rate x Job's Labor Hours
Overhead Cost for the Job = $6 per hour x 40 hours = $240
Therefore, the amount of overhead cost applied to the job would be $240, which corresponds to option c.