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.

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Business

Andrade

28 September, 18:51

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.

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Quinton Walsh · Answer 1

(C) $975,000

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