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) $250,000.
B) $5,000.
C) $25,000.
D) $125,000.
E) $16,000.

Question

Quizplus · Accepted Answer

To calculate the overhead allocated to the job, we need to multiply the total labor cost by the overhead application rate: 
Overhead = 125% x $20,000 
Overhead = $25,000 
Therefore, the correct answer is choice C, $25,000.

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