A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?
A) $5,000.
B) $16,000.
C) $25,000.
D) $125,000.
E) $250,000.

Question

Quizplus · Accepted Answer

The overhead allocated to the job is calculated as 125% of the direct labor costs. Therefore, 125% of $20,000 = 1.25 * $20,000 = $25,000.

A Company Has an Overhead Application Rate of 125% of Direct