A bid includes 320 direct labor hours, and the company's overhead allocation rate is $18 per direct labor hour. How much overhead should be included?
Correct Answer
A) $5,760.
Multiply direct labor hours by the overhead rate: 320 x $18 = $5,760.
Why This Is the Correct Answer
Multiply direct labor hours by the overhead rate: 320 x $18 = $5,760.
Why the Other Options Are Wrong
Option B: $4,800.
$4,800. is below the supported result for overhead allocation; it likely skips a premium-pay or employer-cost component.
Option C: $6,240.
$6,240. is above the supported result for overhead allocation; it likely pays the wrong premium tier or counts the same hours twice.
Option D: $7,200.
$7,200. is above the supported result for overhead allocation; it likely pays the wrong premium tier or counts the same hours twice.
Memory Technique
Who controlled multiply, who paid labor, where is the Building Bid record?
Reference Hint
Study anchor (closed-book): memorize Overhead allocation from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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