Question

Canfield Construction applies overhead to its projects at a rate of $65 per direct labor hour. Laborers are paid an average rate of $30 per hour. The Jefferson Apartments project was charged a total of $1,200,000 in direct materials and $450,000 in direct labor costs. Overhead applied to the Jefferson Apartments project amounted to: (A) $450,000.(B) $650,000.(C) $975,000.(D) $1,600,000.

Answer 1

(C) $975,000

Step-by-step explanation:

The computation of the overhead applied is shown below:

= Direct labors hours × rate per direct labor hour

= 15,000 hours × $65

= $975,000

The direct labor is computed below:

= Total direct labor cost ÷ Average rate per hour

= $450,000 ÷ $30 per hour

= 15,000 direct labor hours

Hence, the correct option is c. $975,000