Nugyen Pty Ltd estimates its overhead costs will be $300,000 for the coming year and it will use 20,000 direct labour hours over the same period. How much overhead will be charged to a job that uses 25 direct labour hours?

Question

Quizplus · Accepted Answer

The overhead rate per direct labour hour is calculated as total overhead costs divided by total direct labour hours, which is $300,000 / 20,000 hours = $15 per hour. Therefore, for a job that uses 25 direct labour hours, the overhead charged would be 25 hours * $15/hour = $375.

Nugyen Pty Ltd Estimates Its Overhead Costs Will Be $300,000