A time and materials contract specifies labor at $85 per hour with a 1.5 multiplier for overtime. If a worker works 45 hours in one week (with 5 hours overtime), what is the total labor charge?
Correct Answer
D) $4,037.50
Regular time: 40 hours × $85 = $3,400. Overtime: 5 hours × $85 × 1.5 = $637.50. Total: $3,400 + $637.50 = $4,037.50.
Why This Is the Correct Answer
The calculation correctly separates regular time from overtime hours and applies the appropriate rates. Regular time is calculated as 40 hours × $85 = $3,400, while overtime uses the 1.5 multiplier: 5 hours × $85 × 1.5 = $637.50. The total labor charge is the sum of both: $3,400 + $637.50 = $4,037.50.
Why the Other Options Are Wrong
Option A: $4,250
This answer ($3,825) appears to use an incorrect calculation method, possibly applying a uniform rate without properly accounting for the overtime multiplier of 1.5.
Option C: $4,462.50
This answer ($4,462.50) significantly overcharges and likely applies an incorrect multiplier or calculation method to the total hours worked.
Memory Technique
Remember 'ROTO': Regular first (40 hrs), Overtime second (excess hrs), Total multiplier (1.5), Overall sum - always keep regular and overtime separate in your calculations.
Reference Hint
Florida Building Contractor Reference Manual - Contract Administration and Labor Cost Calculations chapter
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