A work element in the project plan requires 50 hours of labor each by four carpenters.The carpenters are paid $15 per hour and incur an overhead rate equal to 80 percent of their direct labor charges.The total cost would be __________ if the carpenters consume 10 percent of the workday performing personal activities.
A)$4,860
B)$5,000
C)$5,360
D)$5,940

Question

Quizplus · Accepted Answer

Total direct labor cost = 50 hours x 4 carpenters x $15/hour = $3,000
Total overhead cost = 80% x $3,000 = $2,400
Total cost of labor = $3,000 + $2,400 = $5,400

If the carpenters consume 10% of the workday performing personal activities, they would only be working for 90% of the day, or 7.2 hours (assuming an 8-hour workday).

New total direct labor cost = 50 hours x 4 carpenters x $15/hour x 0.9 = $2,700
New total overhead cost = 80% x $2,700 = $2,160
New total cost of labor = $2,700 + $2,160 = $4,860

Therefore, the answer is D.

A Work Element in the Project Plan Requires 50 Hours