In the deck repair file, a company has annual overhead of $315,000 and expects 14,000 direct labor hours. What overhead rate per direct labor hour should be used?
Correct Answer
D) $22.50.
Divide annual overhead by expected direct labor hours: $315,000 / 14,000 = $22.50 per hour.
Why This Is the Correct Answer
Divide annual overhead by expected direct labor hours: $315,000 / 14,000 = $22.50 per hour.
Why the Other Options Are Wrong
Option A: $18.50.
$18.50. is below the supported result for overhead allocation; it likely skips a premium-pay or employer-cost component.
Option B: $20.
$20. is below the supported result for overhead allocation; it likely skips a premium-pay or employer-cost component.
Option C: $24.
$24. is above the supported result for overhead allocation; it likely pays the wrong premium tier or counts the same hours twice.
Memory Technique
Overhead Allocation ladder for Setting Contractor'S: hours climb before dollars add up.
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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